Online auto credit comparison
Buying a vehicle is the most important purchase after buying real estate in United States. Borrowing for this type of property remains current even if this act must be considered as a serious operation, a loan to be repaid. It is possible for consumers to finance the personal or professional purchase of a vehicle through a bank or a financial institution. There are many institutions offering consumer loans on the market, so choosing the right organization ensures minimum fees and attractive rates.
Auto credit is part of consumer credit. It allows an individual to acquire a vehicle. It is an affected credit, that is to say it must be used for a specific purpose and for the purchase of a predefined good before the mobilization of credit. The good can concern a new vehicle but also a used vehicle. The vehicle concerned by the credit is specific and unique and cannot be changed once the credit is in place. Auto credit protects the consumer since the good must be delivered for the credit to be committed. A defective, undelivered item will automatically cancel the credit. However, it is not possible to use the money for another asset and a new file will have to be compiled if the asset is substituted by another. The act must stipulate the contact details of the seller as well as the exact nature of the goods engaged. The estimate, the dealer's offer, etc. must be added to the file. The total amount of the loan is paid directly to the seller without going through the borrower who will in turn have to reimburse the financial institution directly. In United States, this type of loan is governed by the Consumer Code which also defines mortgage loans. The term of the loan is automatically less than the life of the asset.
Organizations offering consumer loans, of which auto loans are a part, are plentiful and banks are no longer the only organizations to offer loans. Many financial organizations can offer consumer loans. In order to get the best rates, a large number of online credit comparators are available on the internet and can give consumers a clear idea of what the market has to offer. However, "how to find the best deal" often remains the question that every consumer asks.
One of the significant advantages of credit comparators lies in their ability to capture the best offers on the web and to identify, thanks to their search engines, everything that is offered in the range of products sought. In order to choose the right credit comparator, it is imperative that it be neutral. Several regulations have been put in place to ensure that resellers do not promote their products in this way. A comparator which does not itself offer the goods to be compared will therefore in theory be more reliable.
What to compare for a car loan?
A vehicle is similar to a semi-perishable good, since the car lasts a certain time but its wear can be significant and it cannot be used indefinitely. The loan cannot therefore exceed its lifetime or in any case the expected duration of use.
- The cost of credit determined by the TEG (Global effective rate)
The overall effective rate is the interest rate set by the financial institution or the bank. This rate cannot be higher than the usury rate set by the Bank of United States. It is thanks to this rate that the total amount of the credit can be calculated and that the monthly payments can be fixed. The overall effective rate remains the most important element to compare in the event of a loan. This is also an item that can be negotiated. In general, for a car loan, the rates are between 4.5% and 9% and the loan term is between 1 year and 5 years.
- The duration of the loan and the monthly payments
The percentage commonly retained as being an acceptable debt ratio by banks and financial organizations is 33%. Thus, when a borrower calculates his repayment capacity, the total of current credits and the future auto loan must not exceed one third of the monthly net income. Beyond this amount, the borrowing organizations are able to refuse the loan, especially if firm external guarantees are not added to the file.
Before comparing the monthly payments, it is important to have an idea of the debt ratio but also to calculate in relation to personal or professional expenses, to future expenses if the monthly payment is possible over the considered period.
- Insurance offered by the credit institution
Since September 2010, consumers are no longer required to subscribe to the insurance offered by the financial institution holding the loan. It is therefore possible - but also advisable - to play the competition and compare auto loan insurance offers. Auto loan insurance is not compulsory and remains a minimal amount but it allows in the event of hard knocks a repayment of the credit by an insurer. This insurance is valid in the event of death, loss of employment (in the context of a dismissal for an indefinite job), temporary incapacity to work or even total and irreversible loss of autonomy. This insurance is not to be confused with the auto insurance that insures your vehicle on the road and in everyday life.
Once the online comparator has identified a list of financial organizations offering a sufficiently relevant offer, the borrower must, with equal offers, contact the organizations and endeavor to enter into the details of the offers. Does the organization offer administration fees? Does it offer free flexibility regarding monthly payment dates? Can early repayment be done free of charge? For a consumer loan, it is not uncommon for the administration fees to be included in the contract. However, it is possible to negotiate other benefits. Some organizations offer debit dates that can vary from month to month without charge or even the possibility of repaying the loan amount upstream, during an unexpected inflow of money for example. It is important to consider prepayment when buying a car since many consumers easily resell this type of property; as the loan is assigned to a particular vehicle, it will not be possible to use it for a new vehicle. Early repayment may therefore be practical in the event of a resale.
Finally, it is important to compare other elements such as contact with the credit institution, the ease of setting up the file, the ability of the interlocutor to listen to your project (especially in the case where the loan is your first loan or if you are in a special financial situation).
How to compare your credit?
In order to properly compare a credit, it is important to compare the same elements in order to compare financial organizations on similar files. Online credit comparators ask the borrower to fill in a certain number of elements that will have to be determined beforehand and that you can determine by constituting your file. To do this, the borrower must have an idea of the property that will be purchased and the total and final amount of the purchase (do you want all the options of your vehicle, for example).
First, the total amount of borrowed capital which is equal to the total capital minus the borrower's contribution. It is important to know what the contribution will be upstream because the greater the contribution, the lower the borrowing rate will be. Then, it is necessary to define, according to the repayment capacity of the borrower of the monthly payments to be repaid. This will make it possible to determine a loan period and this is often requested by credit comparators. Often credit comparators may ask you for subsidiary elements such as age, amount of the contribution, your salary, etc. It can be interesting to prepare these elements upstream because they will prove to be necessary later.
The acquisition of a vehicle very often goes beyond the simple purchase of a consumer good. This involves access to work (in this case the vehicle can also be a professional vehicle), the possibility of traveling more easily and with others, the possibility of making everyday life easier (shopping, medical trips, official procedures ). The auto loan can be the solution, however there are other possibilities. First of all, micro credit (which can also be found online) is a personal loan and is not allocated to a particular asset, so the money can be used for other operations. Then, the leasing or also called LOA (Rental with option to purchase) or leasing which is similar to an assigned credit, the monthly payments are less important than with a car loan because you do not own the vehicle but in own the usufruct during the term of the loan.