How to get one at the best rate?

Combined with a service pack or taken out independently, it is characterized by a very high variety.

In this context, do you know how to obtain the best conditions for your car loanwhether the latter is contracted with a concessionaire, a banking establishment or a credit organization?

What is auto credit?

A “car loan”, when it is specifically designated as such by the lender, logically belongs to the family of assigned credits. It consists of granting the borrower a sum of money specifically intended to cover the purchase of a four-wheeled motor vehicle.

Why choose a car loan?

Car credit has become essential for the purchase of a new or used vehicle. It allows you to quickly become the owner of a vehicle, without having to wait to have sufficient savings and without losing your cash.

The granting of credit and the actual purchase of the vehicle are inseparably linked : if the delivery of the car, for one reason or another, is canceled, the car loan is null and void and the borrower therefore has nothing to repay. Conversely, a borrower who fails to find a lender may cancel the sales contract free of charge. Finally, an affected car loan only begins to be reimbursed from the receipt of the vehicle by its owner.

Note that it is also possible to acquire a car by subscribing other forms of credit less supervised.

What are the main features of auto credit?

A personal loan allocated to the purchase of a vehicle has several characteristics to which the borrower must be attentive. We note for example:

• the amount of the loan: together with the contribution, it must cover the entire purchase and the associated costs (gray card, registration, road setting, etc.);
• the duration of the credit: 36 months, 48 ​​months, 60 months, 72 months and up to 84 months, it has a direct influence on the amount of the monthly payment;
• the interest rate: this is generally the first point of comparison for obtaining a cheap car loan. Administrative costs must also be included in the calculation.

In any case, a personal contribution more important makes it possible to reduce the amount to borrow and, consequently, to put you in debt a little less. Do not hesitate to postpone your purchase for two or three months if this can allow you to put on the table an interesting sum.

What are the other types of car loans?

The assigned credit is not the only avenue for an individual who would like to finance the purchase of a new vehicle.

• The personal loan, due to its flexibility, is preferred by a number of borrowers. It makes it possible to request a sum of money of a certain amount without having to justify its use. No need, therefore, to produce a purchase order or a supporting document of the same type. Be careful however: the borrower is also less protected, since a cancellation of the sale will not commit him less to repay his credit. Also, note that the interest rates for a personal loan tend to be a little higher than those applicable to an assigned credit.
• Rental has been growing very rapidly for several years. Rental with purchase option (LOA), long-term rental (LLD) and balloon credit are the three variations. We are no longer talking about monthly loan payments, but about rents. The driver is the lessee of his vehicle. Please note: in LOA and balloon credit, it is possible to buy back the vehicle at the end of the contract, which is not the case for the LLD.

“Motorcycle credit” is another type of consumer credit. very close auto credit, it is also characterized by the loan of a sum of money by the bank for a specific purpose, namely the acquisition of a motorized two-wheeled vehicle (motorcycles, but also scooters or motorcycles). The credit validity or cancellation conditions are exactly the same as in the case of a car.

Cheap car loan: how to make the right choice?

Difficult to sort through the jungle of formulas, each one more attractive than the other. However, it is possible to compare different car loan offers effectively by limiting yourself to some criteria determinants:

• The overall effective rate (TEG), stated in the form of an annualized percentage, reveals the total cost of the credit, that is to say the sum of the interest to be paid at the nominal rate and the possible administrative and other costs. “commissions” or “miscellaneous charges”. These can increase the cost of credit considerably, and it is therefore important to monitor them. The TEG can also be expressed in the form of a precise amount in euros, the total cost of the credit, which will represent the difference between the total sum reimbursed by the borrower and the sum originally borrowed.
• The credit term is counted in months. For an equivalent amount lent, a longer term is equivalent to lower monthly payments, but also to a higher total cost of credit. In any event, it is recommended not to borrow for a period of more than five years (ie 60 months), which corresponds to the most conservative estimate of the lifespan of your future vehicle. However, it is possible to obtain a car loan for up to 84 months in certain cases.

Car loan insurance: is it compulsory?

Car loan insurance is not made compulsory by law for consumer credit and therefore for car credit. If the sum borrowed is significant in relation to your income or your savings, it is however recommended to insure yourself at least against death and total incapacity for work. The credit can thus be totally or partially reimbursed and you and your heirs will be protected.

Cheap car loan: how to find the best rate?

When buying a vehicle, finding the best deal for your car loan is sometimes a real challenge. Depending on your personal situation, the financing organization you choose, the promotional offers, the amount of the loan and the duration of the car loan, the interest rates can vary significantly. Based on this observation, how do you know if the proposal you have obtained is interesting?

What are the best car loan rates ?

In order to compare the different car loan offers, it is essential to base yourself on comparable proposals in terms of amount and duration of the loan. The APR is the preferred indicator for comparing offers with each other: it takes into account all credit-related costs. To give you a first idea, refer to the following table indicating the best rates that it is possible to obtain in 2019.

	Minimum APR	Average APR	Maximum APR
Car (and motorcycle) credit	0.99%	1.98%	4.40%

Best APRs in 2019 for a car loan of €15,000 over a period of 12 months

In any case, do not hesitate to compete and turn to players other than traditional banks: taking out a cheap car loan online is quite possible and often allows you to save money.

Example of simulation of a car loan

In order to budget your project and to be able to know the amount of car loan that you can achieve, loan simulations are particularly recommended. For example, buying a car for $15,000 at an average interest rate of 1.98% represents the following monthly loan payments:

• car loan over 24 months: €637.97 per month;
• over 48 months: €325.30 per month;
• over 60 months: €262.79 per month.

The duration therefore greatly varies the share of the monthly budget allocated to the financing of a new or used car. It is necessary to take a certain margin to integrate the rest of the costs: maintenance, gasoline, vehicle insurance, etc.

Cheap car loan: where and how to borrow?

Car loans are offered by three major categories of lenders.

1. The car dealerships themselves, first of all, have an undeniable practical advantage: you can take out your car loan at the same time as you sign the contract of sale of the vehicle. These loans, moreover, are very often integrated into a “pack” offering many other services, including vehicle insurance, breakdown assistance, extended warranty or vehicle maintenance subscription.
2. Your bank, it too, necessarily has an offer in terms of car loans. It is therefore recommended that you make an appointment with your adviser to present your project and examine the loan offer that will be made to you. This option is generally less expensive than a dealer loan.
3. Organizations specializing in car loans, finally, have a wide range of formulas for the purchase of a personal vehicle and generally offer to take out car loans on advantageous terms directly online.

The subscription terms of a car loan are relatively simple. All you need to do is provide a photocopy of an identity document, a recent proof of address, a bank account statement, proof of income or resources (salary slips, account statements, etc.) and of course a copy of the voucher. vehicle control.