Auto credit rate comparator
Are you planning to buy a new or used car? To finance this project, you want to use car credit but at what rate? Auto credit rate comparators will help you in your choice ...
The characteristics of auto credit
Auto credit is a consumer credit that is allocated to the purchase of a new or used car. It is granted by a banking establishment or a financial organization under certain conditions.
Auto credit: a consumer credit
Auto credit being above all a consumer credit, it is therefore taken out according to the general terms of consumer credit.
For individuals, consumer credit makes it possible to finance the purchase of goods and services for everyday consumption other than real estate. The most telling examples to illustrate the goods that fall into the category of consumer credit are home equipment or a car.
Consumer credit is by nature a credit granted for fairly small amounts, repayments are made over a fairly short period and the guarantees required from the borrower are lower compared to other types of credit such as mortgage loans.
The car loan may be granted for a minimum amount of $ 200 and a maximum amount of $ 75,000. The duration of the monthly payments must be greater than 3 months.
Auto credit is subject to the same withdrawal period after signing as consumer credit, namely 14 calendar days from the date of signing the contract.
Legally, like any credit, consumer credit and therefore auto credit engages the person who subscribes to it and must be reimbursed. The borrower must check his repayment capacity before subscribing to it.
Auto credit: affected credit
Restricted credit is credit granted for a specific purchase such as movable property or a service. As its name suggests, auto credit is intended exclusively for the purchase of a new or used car. Auto credit finances the sale of a new or used car regardless of whether the seller is an individual, a garage or a dealership. The credit will be granted only if the purchase of the car is effective.
The purchase of a new or used car being the condition for granting auto credit, it will be necessary to justify the purchase of this car from the credit organization. Most often, an estimate, an invoice or even the establishment of an order form with a concessionaire will allow this justification to the credit organization. In addition, there are other supporting documents such as proof of identity, income and assets. These documents are required to verify that this debt will not exceed 33% of your income. This rule of checking your solvency aims to protect you, as a borrower, to avoid over-indebtedness but also the lender who ensures your repayment capacity.
If for any reason the delivery of the car is canceled, the cancellation of the credit will be automatic, even though the financial institution has granted this credit. As a borrower if you do not get this auto loan, the sales contract will be null and void and you therefore have nothing to repay. The repayment of the credit is therefore made from the date of receipt of the car. Also, under certain conditions in the event of disputes over the purchase contract, the reimbursement may be suspended.
Auto credit is therefore a consumer credit allocated to the purchase of a car. Which is the most reassuring for the borrower because he will not need to repay this loan if the car is not obtained.
This definition makes it possible to understand what the auto loan corresponds to but concretely it is made up of different elements which will allow to define its overall cost.
The building blocks of auto credit
Different elements will concretely constitute the overall cost of your car loan.
First of all, to finance your purchase you can make a personal contribution. This is not compulsory, but it will have the effect of reducing the selling price and consequently reducing the overall cost of credit.
The overall cost of the auto loan also includes the annual percentage rate called APR. It will be set by the credit organization and may vary from one organization to another without exceeding the rate of wear. It is an annual percentage which represents the various elements associated with this credit such as the nominal rate, administration fees, commissions, and insurance contributions.
The overall cost of your auto loan will also depend on the length of the loan. Expressed in months or years, it tells you the duration of your debt and will allow you to deduct the monthly payments. Indeed, the shorter the duration, the higher the monthly payments. It is also recommended that this duration does not exceed 5 years, which corresponds to the most conservative estimate of the lifespan of your future vehicle.
As a borrower you can also take out insurance. As for the contribution, this insurance is not compulsory but it allows to insure the borrower, and also the lender. This insurance is strongly recommended if the amount borrowed is large. For example, in the event of death, the insurer will cover your monthly payments.
The overall cost of your auto loan is made up of the monthly payments which therefore correspond to the amount that you must pay monthly to finance this loan.
So the components of your auto loan depend on you but especially on the lender to whom you are going to contact. It is also advisable to make your choice to make a comparison between the different lenders who offer different rates.
The auto credit rate comparator
As seen above, the cost of auto credit is determined according to elements that are specific to your situation and therefore they will always be the same regardless of the loan institution you choose.
On the other hand, other elements determining your auto credit can vary greatly from one lender to another. The element that will greatly affect the overall cost of your auto credit from one lender to another is the rate.
This rate, more commonly called the APR (annual percentage rate of charge) incorporates several elements:
- The nominal rate: it is used to calculate the interest. Those are the credit organizations which will choose this nominal rate except for certain loans or the law regulates directly like the loan at zero rate. Lending organizations fix themselves on the rate at which they themselves could have borrowed and they add a margin which is specific to each lender because it results from charges, commercial policy or even risks.
- Application fees: this is what the loan organization will charge you for the study and constitution of your file. These fees typically represent 1% and 1.5% of the amount borrowed.
- Contributions for insurance: insurance is not compulsory but if you subscribe to it, the contributions will generally be integrated into the APR.
The lender has the obligation to show the APR in the loan offer he offers you. The APR cannot vary during the term of your loan. It is generally between 2.5% and 7.7% or even 10% for certain specialized organizations. On the other hand, it cannot exceed the usury rate, that is to say the maximum legal rate fixed each quarter by the Bank of United States.
The rate is therefore the main element of comparison when choosing where to take out your car loan. To compare offers, you can directly use online comparators. Most comparators will ask for fairly simple information to make their offers such as your contact details, your marital status, the desired amount, the desired repayment period, the type of new or used car as well as your income.
Namely, even if the rate is the element of comparison to which you should pay the most attention, you can take into account other concepts such as possibilities of redemption or postponement of maturity.
The function of the comparator will therefore be to offer you several credit offers for the same amount with rates which are already the most advantageous for you. Then it's up to you as the borrower to make your choice among these different proposals. Using the comparator will save you time to find the most interesting offers.
In addition to a loan comparator, you can always get information from a brokerage agent. Brokers are qualified to answer all of your questions.
The comparators will allow you to have a quick vision of the impact of car credit on your finances because they will allow you to know the monthly payments but the comparison especially allows you to find the cheapest possible car loan. Indeed, the rate being a tangible element that can increase or reduce the overall cost of your car loan, you must first of all compare the offers to make your choice.