How to get a cheap car credit?
July 22, 2019
How to get the best auto credit possible?
Offered by numerous organizations (banks, credit platforms, dealers), car loans make it possible to buy a new or second-hand car, a crucial issue to make everyday journeys easier! What do you need to know to get a cheap car loan?
The different types of auto credit available on the market
Car loans come in many forms:
- The most common auto loan is an “affected” consumer credit, the contract of which specifies how the capital is to be used: the use of funds to be justified by the beneficiary. This type of loan is granted more easily, and generally at a better rate, than the traditional personal loan while being more protective since the credit can be canceled if the sale does not take place (no delivery, defective model).
- The personal loan remains of course an option for the borrower, especially as the flexibility in the use of funds can cover other financing needs such as work or a difficult end of the month. But it must be paid back whatever happens, even if the purchase of the car is not concluded, since the capital is not affected …
- Some car brands offer zero-rate loans in their concessions, which are payment facilities in the form of interest-free loans: the monthly payments only cover the amount required for the purchase of the vehicle, plus the handling fees and the costs of the car. ‘insurance. However, these loans are “captive” because the beneficiary can obviously only buy a car of the corresponding brand.
- Dealers and builders have developed leasing with the option to buy (LOA), an offer that allows to finance the use of a car through the payment of rent and to be able to definitively buy the vehicle (or not) to the result of the duration of the contract.
In all cases, the amount of a consumer credit can not exceed 75 000 €, regardless of the model purchased. If the desired vehicle has a purchase price higher than this limit, it will be necessary to supplement the car loan with a personal contribution or another loan. In addition, the repayment period is framed: from 3 months to 7 years.
Is there a “good time” to have a cheap car loan?
Credit institutions determine the rate of the car loan by analyzing the level of risk for each borrower profile, and in particular the debt ratio: the share of income that is already devoted to the repayment of previous loans. Therefore, if the applicant has several outstanding loans to assume, it will be more difficult for him to obtain a new low-cost loan. It is better to wait until you have closed the old credits before signing another one.
Moreover, if the car loan is contracted in the same establishment as the previous credits, it is likely that the advisor will conduct a preventive audit … That is why it is advisable to be up to date with the payment of all his monthly payments at the time of application!
The healthy competition of auto credit formulas
The borrower can if he wants to call a broker specializing in car credit, which will undertake to compare and negotiate on its behalf all offers in force to determine the best possible car loan based on its income and the desired amount. This competition can lead to a very advantageous rate.
Credit institutions often offer their customers a complete “package” containing car credit plus car insurance, but nothing obliges the loan recipient to accept: he can quite guarantee his vehicle elsewhere if he finds a best insurance offer!
A car loan is less expensive than a long-term lease
Many individuals are tempted by new forms of mobility such as long-term leasing (LLD) or leasing with option to buy (LOA), in particular because monthly lease payments are lower than monthly repayments a car loan.
But unfortunately, LLD and LOA formulas contain expensive services (maintenance package, insurance of financial loss in case of theft or destruction, insurance all risks) that significantly increase the bill in the long term. In fact, beyond a certain number of months, buying a vehicle with a conventional car loan is almost always cheaper than renting.