What is an auto loan? The sole purpose of such a loan is to finance the car, allowing you to pay for a vehicle, whether new or used. And as with any loan, you repay a monthly amount including interest specified in the contract period.
A careful comparison is therefore necessary and which can be done by consulting Car Expert Group.
To buy a new car, cash payment is not mandatory, unless you have sufficient funds. Buying a car on a loan is an interesting alternative to acquiring a new or used vehicle. Different financing solutions exist, with significant savings, because the average annual rate can vary from 4% to 10%. Here are our tips to increase your chances of finding the car loan that best meets your needs.
To acquire a vehicle, you have the choice between a car loan and a personal loan. Each formula has its advantages and disadvantages.
Like any affected loan, the auto loan is directly linked to the purchase of a vehicle. This option is safer for you, the buyer because the sales and loan contracts are interdependent. On the one hand, the reimbursement does not start until the reception of your car.
On the other hand, if the vehicle is not delivered to you or is found to be defective, the loan is automatically canceled. Finally, if your financing request is refused, the sale is suspended and you are free from any commitment.
However, the processing time for the request is longer. It is therefore preferable not to confirm the purchase with the seller before having received the response from the credit institution.
The personal loan is normally granted at a higher rate than the dedicated auto loan. And unlike the latter, its use is free. You do not have to justify expenses incurred with the money obtained.
You can even borrow more than the cost of the car. It is therefore more flexible, but you are not protected: even if the car does not work properly, or even is not delivered, the reimbursement begins immediately and all monthly payments are due.
Balloon loan allows a partial repayment of the value of the car, which leads to a reduction in monthly payments. This option is interesting if you plan to change your vehicle regularly. Besides, once the loan has been paid off in full, you can buy the vehicle and thus become its owner.
Note that for a used vehicle, the transactions being mostly between individuals, the credit offer is less structured, and the proposals, not very interesting. Indeed, in the event of non-payment, the new car has more value; by seizing it, the lender has a better chance of recovering what is due.
When the auto loan is signed, the law gives you 7 days to reconsider your decision, provided you have mentioned on the order form that the operation is done on credit.
To do this, you must return the withdrawal form attached to the contract to the lender. If you have paid the seller a deposit, he has the obligation to reimburse.
What are the criteria for granting a car loan? To be eligible for a car loan, you must be of legal age and ability and have stable resources.
Besides, promotions are regularly offered by banks and lending companies. To go around the market without wasting too much time, there are two solutions: use a broker or use online comparisons.