The car loan is an assigned loan to finance the acquisition of a new or used car. The purchase of a vehicle can represent a significant investment but it can amount to several thousands or tens of thousands of euros, which is not accessible to everyone. Auto loans help meet this financing need.
How can I get a car loan?
It is also possible to finance the purchase of a vehicle with a personal loan, not just with an assigned credit. The personal loan makes it possible to borrow a sum of money of the wished amount, without having to justify its use. However, personal loan rates are generally higher since the credit agency has no collateral following the purchase of a specific item. The borrower is also less protected in this case of figure because if ever a problem arises with the sale or if this one is canceled, it will still have to repay the credit, which would not be the case in the frame of an assigned loan. Thus, it is the most suitable and simplest solution for financing the purchase of a vehicle, whether new or used. Indeed, in the context of an assigned loan, the sales contract and the credit are interdependent, which means that if one is canceled, the other will be canceled. This represents a significant security for the borrower.
To subscribe to a car loan
You have the choice between three main categories of lenders. First of all, there are car dealerships through which you can have a credit agreement at the same time as the contract for the sale of the vehicle. This type of loan often includes various options such as vehicle insurance, a warranty extension, a breakdown assistance … This ultimately has a practical advantage if you want the process to proceed quickly.
Then there are banking institutions that normally have all auto credit offers. You can go directly to your bank by making an appointment with an advisor to discuss your project with him and set up an offer that meets your needs.
Finally, there are the organizations specialized in credit, some even specializing in auto credit in particular. You can find many formulas to finance the purchase of a vehicle.
It is possible to carry out all the procedures online
By going directly to the websites of the organizations of your choice or by using a comparator that will help you to choose among the various offers more easily.
In any case, the procedure is relatively simple. You will have to fill out a file and provide the required supporting documents. Among them we usually find a photocopy of a valid ID (passport, CNI, residence card), a recent proof of residence, proof of income (account statements, pay slips, notice of taxation, employment contract for borrowers who are on fixed term …), a bank statement of account and finally, a copy of the purchase order of the vehicle which is necessary to justify your purchase within the framework of an assigned credit. It is your ability to repay that will be studied with the greatest precision in order to determine the amount that you can request and the repayment period resulting in monthly payments that may correspond to your situation. The maximum debt threshold that a financial institution may authorize is 33% of total revenues.
Do not be discouraged if your bank ever refuses you a car loan
the conditions for obtaining the loan vary a lot depending on the institutions that offer this type of credit. Thus, you will always be able to get the loan from another credit agency or a subsidiary of a car manufacturer. However, no credit organization will grant you a loan if you are banned from banking, so you will always check if you are not on the FICP or FCC list.
As with most credits, once the credit agreement is signed, the borrower has 14 days during which he has the right to withdraw.
What are the ways to get the cheapest car credit?
First, think about taking stock of your financial situation. In order to obtain the cheapest car credit, you must first have the best possible record. Think carefully about the monthly payments that you will be able to repay while remaining reasonable and planning not to have to make too much effort. In any case, you will not be able to obtain a loan if all the credits you have to repay exceed 33% of your income.
It is advisable to go to a bank or credit institution rather than go directly to a dealer. Indeed, although the process is generally simpler given that a credit agreement can be offered at the point of sale of the vehicle, the offers you will find with subsidiaries of car manufacturers will often be more expensive. Thus, if you want to get the lowest interest rate, it would be better to use a bank or a credit institution.
You can try to find out about online offers on banks or financial institutions websites, which are often cheaper. One of the advantages of online procedures is also the convenience since you will not have to move from home in the process of setting up the credit agreement. To compete with various credit agencies, you can make auto credit quote requests to each of them. However, it may take a while so you can also use an online comparator to do the work for you. This is one of the simplest ways to get a cheap car loan. Indeed, this will allow you to have a general overview of the offers of the market to find the one that suits you best.
Always check what is the rate put forward by the different credit agencies
Do not forget to always check what is the rate put forward by the different credit agencies because the nominal interest rate only takes into account a part of the cost of the credit without including the various expenses to who can there add. It is the APR (annual percentage rate of charge) which makes it possible to visualize the totality of the amount which you will have to repay. It includes the annual interest rate but also ancillary costs such as fees, any guarantees or insurance, various commissions etc. This is the best comparison between several credits and it is to him that you will have to be careful if you want to find the cheapest car loan.
Do not hesitate to perform several simulations of a car loan because it will allow you to adjust the monthly payments according to your repayment capabilities. In addition, by decreasing or increasing somewhat the amount you want to borrow, by lengthening or reducing the repayment period, it is sometimes possible to benefit from a better rate. Generally, the best way to get the cheapest credit is to subscribe to it in the shortest possible time. This will lower the risk for the lender for which it is more likely to be repaid and therefore it may offer you a more attractive rate than a credit with a longer term.
The amount of monthly payments is a key factor
It influence the total amount to be repaid. The more the monthly amount you agree to repay will be higher, the faster you will be able to repay the credit and so the proposed rate should be lowered.
Finally, take into account the fact that it is possible to negotiate fees for the purpose of reducing the overall rate of charge and thus, obtain a cheaper car credit. In order to negotiate these fees, consider highlighting the positive elements of your request. You must be able to show the lender how good it will be to grant you the loan by accepting a certain drop in the amount of the fees. To do this, it is important to highlight the customer relationship that you establish with the bank following the signing of the credit agreement which will make your interlocutors more inclined to grant you a discount.
Example of car loan
Take the example of a credit of 10,000 euros, taken out with Crédit Mutuel and intended for the purchase of a used car. If we assume that the borrower wants to repay the credit in 59 monthly installments, they will amount to 188.25 euros, with the last to 188.57 euros. The APR will be 5.45% and the total amount owed by the borrower will be 11,395.32 euros which includes 100 euros of application fees. Here, the optional borrower insurance is not included in the total cost of credit and if the borrower decides to subscribe, an amount of 5 euros will be added to his monthly payments. top