Choosing the right financing for your car purchase can be a complex process, but there are a few key factors to consider. Learn what to look for and how to get the best deal for your needs.
How to finance a vehicle?
The assigned car loan
The use of auto credit is made when you do not have the necessary funds to pay for a vehicle in cash. This loan is part of consumer credit in general. More specifically, this is called an earmarked loan. In other words, this loan is exclusively reserved for the purchase of a vehicle. The money the buyer needs for the purchase is returned to the seller, and the purchaser of the vehicle must therefore repay the amount to the lender. This car loan is governed by the consumer code. Thus, it protects the borrower who does not have to repay the monthly payments before receiving the vehicle. If the vehicle is not delivered, the affected auto credit is cancelled.
The other possibilities
Another solution exists, the LOA (rental with option to buy). This is to allow the consumer to become the owner of the vehicle at the end of the rental contract. An amount being defined in advance. This gives the buyer the opportunity to drive a new or recent car against a “rent”.
Finally, you have the option of going through a personal loan. The latter grants you a sum of money without you having the obligation to justify the nature of your purchase. The sum obtained can be higher, for example, than the value of the vehicle. Obtaining it is not conditional on a particular purchase, the amount allocated can be used to finance something else.
To remember :
With a personal loan or an assigned car loan, you become the owner of your vehicle. On the other hand, the LOA allows you to remain a tenant of it. You will only be the owner at the end of the contract, subject to the payment of a final rent, which is often substantial.
Make the right choice while being certain of being able to repay your loan, whatever the nature of the latter.
Auto credit, how does it work?
As we have seen, auto credit is allocated to the purchase of a vehicle, whether new or not. This loan can range from €200 to €75,000. There is not really a maximum duration for this type of loan, but in general, it extends over 84 months (7 years). On the other hand, the allocated side of the loan requires the borrower to provide proof of purchase to the organization financing it so that the latter releases the funds to the seller. This same lending organization will examine your resources, your expenses, but also your solvency. If the car loan application is accepted, the organization gives you a detailed contract containing the reason for the loan, its amount, the monthly payments, etc. This contract must be signed by both parties, the lender and you, the borrower.
The sum will then be paid to the seller when the latter has sent him the invoice for the vehicle. In a specific context where the sales contract is refused, you have no obligation to pay cash: the sale is simply cancelled.
Thinking about auto credit to finance your vehicle is good, but thinking about insuring it is better! Do not hesitate to take stock of the various contracts available to you on the auto insurance market.
A car loan, yes, but who to turn to?
Take out a loan from a bank
You can finance your vehicle by subscribing to a car loan via a bank. This solution is quite traditional and you just need to make an appointment with a bank advisor to establish a loan quote. During this appointment, you will have a simulation taking into account your monthly income and expenses, etc. This allows you to see, with a professional, your borrowing capacity and the budget you can devote to your purchase.
Depending on the bank chosen, the maximum duration and the highest amount of the loan will be between 50 and 75,000 €, repayable between 60 and 84 monthly installments (5 to 7 years).
From a dealer
By going through a dealer to finance your vehicle, the latter can offer you a car loan with one of its partner loan organizations. Indeed, in general, the offers offered are often in packs. They include the amount of the vehicle as well as breakdown assistance, a flat rate for maintenance, and any additional options. On the other hand, it is not uncommon for the rate of credit allocated to be more expensive than that offered by a lending institution.
However, by going through the dealer, the administrative procedures are simplified and you keep the same contact whether it is the sales contract or the credit contract.
Go through a broker to obtain a car loan
Going through the services of a broker to sign your credit, whether auto or not, is above all a time saver. A broker is a professional who carries out the various administrative procedures and searches for the best offers and the best credit rates for you. Secondly, this option also allows you to earn money, because the study of the broker is made according to your needs, but also according to your profile. That is to say that you benefit from expert advice to obtain credit quickly and clearly.
The services of a broker are not free. However, two possibilities. Brokerage companies can ask their client for compensation, often expressed as a percentage of the credit where other companies offer their services to the client. The latter are paid directly by the bank or the lending organization with which the contract was concluded.
How can you save to best finance the purchase of your vehicle?
A broker, with his wise advice, can even offer you to go through a credit buy-back. Why ? Because car credit is above all a consumer credit. Perhaps you already have one in progress concerning household appliances, energy equipment, another vehicle, or furniture, etc. By doing what is called a credit buy-back, you take the opportunity to have only one monthly payment, and this at a fixed rate. Gain purchasing power and take advantage of your savings to start a new project.
To do this, nothing simpler ! Unique Credit experts are at your service to review your profile with you. While helping you with the formalities, it offers help and support up to the financing of your projects. A free call is enough, get started!
Conclusion
The best way to choose your financing effectively is to do your research and find the best option for you and your budget. There are many different financing options available, so it is important to find the one that best suits your needs. Make sure to ask your lender about the terms and conditions of the loan before you sign anything, and be sure to keep up with your monthly payments to avoid getting into debt.