Cheap auto loan
Auto credit 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 thousand or several tens of thousands of US dollars, which is not accessible to everyone. Auto credit makes it possible to meet this financing need.
How can you get a car loan?
It is also possible to finance the purchase of a vehicle with a personal loan, not just with an affected credit. The personal loan allows you to borrow a sum of money of the desired amount, without having to justify its use. However, the personal loan rates are generally higher since the credit organization has no guarantee following the purchase of a specific object. The borrower is also less protected in this case because if ever a problem arises with the sale or if it is canceled, he will still have to repay the loan, which would not be the case in the context of 'an affected loan. Thus, the latter is the most suitable and simplest solution for financing the purchase of a vehicle, whether new or used. In fact, in the context of an affected loan, the sales contract and the credit are interdependent, which means that if one is canceled, the other will be too. 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 contract at the same time as the vehicle sales contract. This type of loan often includes various options such as vehicle insurance, extended warranty, breakdown assistance ... This ultimately has a practical advantage if you want the process to be done quickly.
Then, there are the banking establishments which, normally, all have offers in terms of auto loans. You can contact your bank directly by making an appointment with an advisor to discuss your project with him and set up an offer that will meet your needs.
Finally, there are organizations specializing in credit, some even specializing in auto credit in particular. You can find there many formulas intended to finance the purchase of a vehicle.
It is possible to carry out all the procedures online, by going directly to the sites of the organizations of your choice or by using a comparator which will help you choose among the different offers more easily.
Either way, the procedure is relatively straightforward. You will have to complete a file and provide the supporting documents requested. Among them we generally find a photocopy of a valid identity document (passport, CNI, residence permit), recent proof of address, proof of income (account statements, pay slips, notice of taxation, employment contract for borrowers who are on CDD ...), a bank identity statement and finally, a copy of the vehicle order form which is necessary to justify your purchase within the framework of an affected credit. It is your repayment capacity that will be studied with the most precision in order to determine the amount that it is possible for you to request as well as the repayment period involving monthly payments that may correspond to your situation. The maximum debt threshold that a financial institution can authorize is 33% of total income.
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 establishments that offer this type of loan. Thus, you will always have the possibility of being granted the loan by another organization specializing in credit or by a subsidiary of an automobile manufacturer. However, no organization specializing in credit will grant you a loan if you are prohibited from banking, we will systematically check whether you are not on the FICP or FCC list.
As with most loans, 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 auto loan?
First, consider taking stock of your financial situation. Indeed, to be able to obtain the cheapest car loan, you must first of all have the best possible file. Think carefully about the monthly payments that you will be able to repay while remaining reasonable and anticipating not having to make too much effort. In any case, it will not be possible for you to obtain a loan if the totality of the credits that you have to repay exceeds 33% of your income.
It is advisable to contact a bank or an institution specializing in credit, rather than going directly to a dealer. Indeed, even if the process is generally simpler given that a credit agreement can be offered at the point of sale of the vehicle, the offers that you will find with the subsidiaries of automobile manufacturers will often be more expensive. Thus, if you want to obtain the lowest interest rate, it would be more judicious to use a banking establishment or a credit organization.
You can try to find out about online offers on the sites of banks or financial institutions, these are often less expensive. One of the advantages of online procedures is also the convenience since you will not have to travel from home in the process of setting up the credit agreement. To put the various credit organizations in competition, you can request auto credit quotes from each of them. However, it may take some time so you can also use an online comparator that will do the work for you. It is one of the easiest ways to get cheap auto credit. Indeed, this will allow you to have a general overview of the offers on the market in order to find the one that suits you best.
Do not forget to always check what is the rate put forward by the different credit organizations because the nominal interest rate only takes into account part of the cost of the credit without including the various costs that may be involved. add. It is the APR (annual percentage rate of charge) which allows you to view the total amount you will have to reimburse. It includes the annual interest rate but also ancillary costs such as administrative costs, any guarantees or insurance, various commissions, etc. It is the best element of comparison between several credits and it is to it that you will have to pay attention if you want to find the cheapest car loan.
Do not hesitate to perform several simulations of a car loan because this will allow you to adapt the monthly payments according to your repayment capacities. In addition, by decreasing or increasing somewhat the amount you wish to borrow, by extending or reducing the repayment period, it is sometimes possible to benefit from a better rate. Usually, the best way to get the cheapest credit is to take it out for the shortest time possible. This will reduce the risks for the lender for whom it represents more chances of being reimbursed and therefore, he can offer you a more attractive rate than that of a loan with a longer term.
The amount of monthly payments is a key factor influencing the total amount to be repaid. The higher the monthly amount that you agree to repay, the faster it will be possible to repay the loan and thus, the proposed rate should be lower.
Finally, take into account the fact that it is possible to negotiate the administration fees in order to reduce the overall effective rate and thus obtain a cheaper car loan. In order to negotiate these fees, remember to highlight the positive elements of your request. You have to manage to show the lender how wise it will be to grant you the loan by accepting a certain reduction in the amount of the fees. To do this, it is important to highlight the customer relationship that you will establish with the bank following the signing of the credit agreement, which will make your contacts more inclined to grant you a reduction.
Example of car loan
Let us take the example of a car loan of 10,000 US dollars, taken out with Crédit Mutuel and intended for the purchase of a used car. Assuming that the borrower wishes to repay the loan in 59 monthly installments, these will amount to 188.25 US dollars, with the last at 188.57 US dollars. The APR will be 5.45% and the total amount owed by the borrower will be US $ 11,395.32 which includes US $ 100 in administration fees. Here, optional borrower insurance is not included in the total cost of credit and if the borrower decides to take it out, an amount of US $ 5 will be added to his monthly payments.