A car loan is a form of bank loan for the purchase of a new or used car, a passenger car or a truck. The undoubted advantages of this product are a long loan period – up to 10 years, and a wide range of recipients. This type of loan is granted to both natural persons having an employment contract, pensioners up to the age of 65, as well as persons conducting business and agricultural activity.
Important information is that thanks to a car loan, you can fully finance the purchase of a vehicle, ie receive a financial equivalent from the bank (exceptions sometimes apply to used cars). You don’t have to worry about your own contribution, although you can meet quota thresholds. The amount of funding is generally USD 10,000 or more. However, if it does not exceed USD 80,000, you can count on some favorable credit terms, citing the Consumer Credit Act of July 20, 2010. In this case, the bank may not demand additional fees for early repayment of the loan, and the commission for initial formalities may not be more than 5%.
What are the costs of a car loan?
It is good to know that the commission fee is usually within the legal limit even for larger loans, sometimes it is canceled as part of the promotion. In general, a car loandiffers from a consumer loan by a longer repayment period and the participation of factors closely related to the subject of financing, ie the car, and its subsequent operation. As you know, consumer credit can be taken for any purpose, and the minimum amount of credit is sometimes only USD 500. The rule known to borrowers is confirmed – following higher amounts, more favorable repayment terms are following. However, the issue of car loan interest is not so simple, because the additional factor is the age factor. The older the car, the higher the interest rate is to be expected. The disproportion when buying a new model from a showroom can be around 2-3% of the interest rate, which gives a pretty large amount annually. Buying a new one is definitely more profitable
What is the interest rate on car loans ?
In addition to the subject of financing, the amount of interest is influenced by: the amount of the loan, loan insurance, the assumed repayment period and the customer’s credit history. All these factors only give a picture of the potential loan repayment conditions, individual for a given person, taking into account their needs and financial capabilities. Taking car loans, as noted by credit advisers and a bank expert, must always be preceded by a thorough analysis of the details of the offer banking. A common trap is the initial payment, which compensates banks for the low interest rates on offer. The sum of the sum of the loan with higher interest may turn out to be more beneficial for the client. Other problematic issues are related to securing the bank, ie the need to purchase an AC policy.
This is, as we know, the basic condition for granting funds for the purchase of a car with the product in question. As collateral for the loan, the bank may propose a registered pledge, transfer of part or all of the car, or third party surety. If the loan is particularly advantageous for promotional reasons, the client may be asked for additional life insurance, but it is good to know that it must be a voluntary decision of the client. Of course, the advantage of additional insurance is financial support in the event of illness or job loss, and you should think about it. There is no obligation then to resign from the services of the current insurance company.
Initial formalities determining the acceptance of a loan application are currently simplified to the maximum, sometimes, according to banks’ assurances, they can take as little as 15 minutes. All you have to do is submit your application online and expect a decision. To obtain a loan, you only need two identity documents and an income statement.
A financial advisor can help you choose a good car loan. It is a person who has all the competences and qualifications to answer all doubts related to this.