Auto credit simulation
Buying a new car is an investment and an important step in improving your everyday life. A consumer credit may be the ideal solution to finance such an acquisition.
The characteristics of a car loan
Several options exist for financing the purchase of a vehicle. Whichever one the borrower decides to choose will be a form of consumer credit. This includes loans whose amount is often between 200 and 75,000 US dollars (maximum amount to benefit from the protection of the code of consumption). It is possible to subscribe to it from banks, institutions specializing in credit or even directly from dealers in the context of an assigned loan or an LOA (rental with option to purchase). The repayment of the amount borrowed as well as the interest is made in monthly installments over a period which varies from one establishment to another but which is generally greater than 3 months and does not exceed 7 years.
The creditworthiness of the borrower is systematically examined by the lender, its debt not being able to exceed 33% of its income. The credit organization must also check if the borrower is not banned from banking in which case it will not be possible for him to obtain the loan.
The contract must include the type of credit, the amount of the loan, the monthly payments, the repayment period and the credit rate expressed in the form of APR (annual percentage rate). Following the signing of the contract, the borrower has the possibility of reneging on his commitment for 14 calendar days. The borrower can also at any time, repay part or all of his loan in advance. However, an early repayment indemnity may be required by the lender.
It is possible to postpone deadlines once or twice a year, depending on the lender. Often, the borrower also has the right to change the amount of his repayments up or down, once during his loan.
Interest rates may vary from one credit agency to another, however, they cannot exceed the wear rates set by the Bank of United States each quarter. These depend on the loan size (less than US $ 3,000, US $ 3,000 to US $ 6,000, or more than US $ 6,000) and are the same for all consumer loans.
The borrower insurance guarantees the repayment of the credit in the event of death, disability or incapacity for work. It is optional and the borrower can subscribe to it with the establishment of his choice, which can, if he wishes, be different from the one with which he decides to apply for credit.
Affected credit, personal loan or rental with option to buy?
First of all, among the loans that can finance the acquisition of a car, we find the affected credit. It is a loan to which you can subscribe from banks, institutions specializing in credit but also dealers. It is a loan intended directly for the purchase of a vehicle, so the borrowed sum cannot be used to finance other projects and will be paid directly to the seller. The loan amount is the price of the vehicle purchased and generally cannot exceed US $ 75,000. If the borrower decides to choose this type of loan, he will be asked, in addition to the standard supporting documents, a document to certify the reality of the purchase. Affected credit is generally the best option in the context of the acquisition of a vehicle because it sets up various protections for the contracting parties. For the borrower, this is a real advantage if ever a problem arises with the sale of the car or if it is canceled, in which case he will not have to repay the loan. If a dispute arises between the buyer / borrower and the seller, the latter must return the sum collected to the lender who in turn will reimburse the installments that have already been paid by the borrower. The interest rate of the affected credit is often lower than that of the personal loan since the purchase of a specific object constitutes a real guarantee for the lender, which reduces the risk for him.
As part of a personal loan, the amount released by the banking establishment or the credit organization does not necessarily have the purpose of financing the purchase of a car alone and can be intended to finance projects of any kind. Thus, the borrower can dispose of the money as he wishes, without having to provide proof of its use. However, if a problem arises with the sale of the vehicle, the borrower will still have to repay the full amount of his loan. In addition, the interest rate is generally higher than that of an affected loan because the bank does not have a real guarantee linked to the purchase of a specific object and the acceptance rules are stricter since the borrower does not have to justify the use of the funds.
Finally, a final option is possible: leasing with option to purchase (LOA), also called leasing. It is a form of consumer credit that allows the borrower to pay rent each month in order to acquire a property (here, a car) temporarily or permanently. This is an interesting option in the event that the borrower is not certain of wanting to acquire the vehicle permanently, it allows him to be a tenant for 12 to 72 months. Once this period has passed, the borrower has the choice between returning the car to the seller or buying it at the price remaining to be paid. The first rent is paid when the contract is signed and may be accompanied by a security deposit, which may correspond to a fixed amount or to a percentage of the value of the vehicle, if this is required by the seller.
How to simulate a car loan?
To be able to better identify your needs and adapt your loan application according to your repayment capacities, you can perform an online simulation. This is free and without obligation. To do this, you can go directly to the site of the bank or institution specializing in credit of your choice or else, first use an online comparator. This will allow you to compare the different offers on the market in order to find the one that suits you best.
To perform a simulation, all you have to do is fill in the required fields on the relevant page of the site of your choice. You can vary the amount of the amount you want to borrow, the monthly payments and the repayment period. You can even run multiple simulations to find the best deal for your situation. Depending on the characteristics of the loan that you have requested, you will then have a proposal that will include the fixed APR (annual percentage rate), the monthly payments and the total amount to be repaid, including the application fees.
Then, once the credit offer has been chosen, you can apply for online financing by completing a form that will be offered to you. This will include your personal and professional information, necessary for the study of your file. In general, following this operation, it is possible to obtain an immediate policy response. You will then receive an offer of a credit agreement by mail that you just have to sign and return to the lender, along with the required supporting documents. The money will be released following the final acceptance of your funding request.
What supporting documents are required for a car loan?
Certain documents are necessary in order to be able to finalize the study of the borrower's file and they must be returned to the lender along with the signed contract. Among the essential supporting documents in the context of a car loan, we find:
-A valid identity document (national identity card, passport, residence or resident card, etc.)
-A proof of address (electricity bill, property tax, rent receipt ...)
- Proof of income (last tax notice, last pay slips, certificate of family benefits ...)
-A bank identity statement (RIB)
-A proof of purchase of the vehicle (if you are applying for an assigned credit)
However, this list is not exhaustive and the institution to which you have applied for funding may require additional documents.
Example of auto loan financing
Interest rates vary depending on the institution. For an affected auto loan, the rate is often between 4.5 and 9%.
Take the example of a car loan (assigned loan) of 10,000 US dollars, over a period of 3 years. According to the credit organization, the monthly payments should be between 282 and 315 US dollars and the total amount of the loan should be between 10,152 and 11,340 US dollars, these amounts not including promotional rates and optional insurance.
For the same loan but for which the contract extends this time over 5 years, the monthly payments will be lower, between 170 and 200 US dollars but the total cost of the credit will be higher, between 10,200 and 12,000 US dollars.