You had a crush on a car? Whether it’s new or used, if you don’t have the means to finance the purchase, you can turn to a car loan. But what is it? And what are the factors to consider in order to find the best deal.
Car credit: What exactly is it?
It is an offer proposed by the banking institutions. The sum obtained is entirely dedicated to the financing of a car. The advantage is that if your application has been refused, the sale is automatically cancelled, without having to repay anything. Similarly, if you decide to withdraw within the legal time limit (14 days), the loan will be cancelled, without charge or penalty.
Depending on the monthly payment, the term can be up to 7 years for a new car and 6 years for a used vehicle, instead of 5 years for a personal loan. At the time of application, the borrower must provide an estimate justifying the price of the vehicle.
What are the points to check before signing the contract?
It should be noted that the rate applied is a little higher than the rate for a personal loan. To find a good deal, before taking out a car loan, you should check the total effective rate. This is the real cost of credit. It includes interest, administration fees and borrower’s insurance. Then, dissect the offer and compare it with other quotes. The nominal rate is the base rate. There can be a significant difference between financial institutions. So be careful. Creditor insurance is also mandatory. It can quickly inflate monthly payments. Moreover, the amount varies according to the guarantees taken out. Nevertheless, with equivalent protection, some companies offer more attractive offers than others. Finally, be aware that the cost of credit will be more expensive if the duration is longer.
How to find the best deal?
Nothing could be simpler! To find the most advantageous contract, use a car credit simulator. Comparison tools are available on many sites. They allow you to estimate monthly payments and to know your debt capacity. Simply enter the type of project, the amount to be borrowed and the desired term. It’s simple, free and without obligation. For example, if you plan to buy a new Renault Koleos, the amount of the loan will be more substantial compared to the purchase of an older model. So plan for a larger repayment.
Otherwise, it is also possible to turn to a car loan broker. This is an expert who acts as an intermediary between the customer and the bank. Thanks to his wide network, he can find the best banking conditions in the shortest possible time. To close, also go to a dealer. They often offer better conditions than banks.