How to get the best auto loan 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 Loan 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 a possibility 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 Loan companies like Roadloans offer zero-rate loans in their concessions, or payment facilities in the form of interest-free loans: the monthly payments cover only the amount required for the purchase of the vehicle, plus the handling fees and fees. However, these loans are “captive” because the recipient can obviously only buy a car of the corresponding brand.
- – Dealers and builders have developed the lease with the option to purchase (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 end of the contract period.
In all cases, the amount of a consumer credit can not exceed 75 000 €, regardless of the model purchased. If the coveted vehicle has a purchase price above 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?
Loan 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 to get a new low-cost loan. It is better to wait until you have closed the old credits before signing another one.
Moreover, if the auto 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 use 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 call for 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!