Often a car is expensive. The purchase, the maintenance, the fuel costs, the insurance are all elements to take into account before changing of vehicle.
If some users can afford a new vehicle by paying cash, others will be forced to resort to external financing. But several types of credits exist. How to make the right choice ?
What are the different types of credit to buy a car?
Very often, the purchase of a vehicle requires the use of financing, the auto loan being the most suitable for this type of acquisition. It is a credit allocated, that is to say, it is intended to finance the purchase (or possibly rental) of a vehicle, and nothing else. As such, the car loan differs from a second mode of financing: the personal credit, which has the characteristic of being able to be used for several purposes. A third mode of financing is leasing, which allows the user of a vehicle to establish a redemption price of the vehicle on a predefined date. A fourth form of financing is the practice of the credit report, which is a car loan.
What are the terms of auto credit?
The car loan is taken out before the acquisition of the vehicle concerned by the financing. The borrower can compete by submitting an auto credit application to several lending institutions. After comparing the auto loan offers and choosing the most suitable offer for his purchase, the borrower signs a car credit agreement. From this signature, the borrower has a period of 14 days to retract, that is to say return on its acceptance of the loan offer. The car loan is an assigned credit, it is directly related to the purchase of a vehicle. As a result, the borrower only begins to repay his monthly loan payments from the date of delivery or entry into possession of the vehicle. In the same way, a possible cancellation of the sale of the vehicle entails the cancellation of the car loan.
If the borrower has signed a reservation contract for the purchase of the vehicle before obtaining a financing agreement, the bank’s refusal to issue a car loan will cancel the purchase of the vehicle. The maximum credit amount is 75,000 euros, with a repayment term of between 3 and 84 months. Moreover, the credit makes it possible to propose adapted solutions in the event of destruction or theft of the vehicle during the repayment period since the sum generally reimbursed by the insurer is supposed to cover the balance of the credit.
Which institutions can offer these credits?
Many institutions offer auto loans: banks, credit institutions, independent financial companies, financial subsidiaries of car manufacturers, or even financial subsidiaries of large stores. Concretely, obtaining a car loan implies the respect of a certain formalism. It is indeed necessary to bring an identity card, a pay slip, a proof of address and a bank account. Once the application is made to the credit institution, it will analyze it: checking the borrower’s solvency ratio, his professional situation … Once the application has been validated, the applicant gets an answer in a delay of a few days. Once the car credit is granted, the beneficiary has a 14-day cooling-off period.
What are the credit rates?
The credit rate proposed obviously depends on several factors: the credit institution, the credit amount, the expected repayment period, the repayment capacity of the borrower, the borrower’s income … As for all borrowing, it is recommended to borrow the smallest possible amount, providing the highest possible contribution, and to repay as soon as possible. Some organizations offer extremely low rates mainly for short-term credits. In contrast, long-term loans provide much higher rates of up to 10%. It should be understood that the car loan includes the APR (Total Effective Rate) which measures the actual rate of the loan calculated as an annual percentage, and the total cost of the loan, which measures the difference between the total monthly repayments and the amount of the loan. borrowed capital.