Discover our comparison of auto loans from jechange partners!
Associated with a service pack or subscribed independently, it is characterized by a very wide variety.
In this context, do you know how to obtain the best conditions for your car loan, whether it is contracted with a dealer, a banking establishment or even a credit organization?
What is auto credit?
A “car loan”, when it is specifically named as such by the lending organization, logically belongs to the family of affected loans. It consists in granting to the borrower a sum of money specifically intended to cover the purchase of a four-wheeled motor vehicle.
Why choose a car loan?
Auto credit has become essential for the purchase of a new or used vehicle. It allows you to quickly become the owner of a vehicle, without having to wait for sufficient savings and without losing your cash.
The granting of credit and the actual purchase of the vehicle are inextricably linked : if the delivery of the car, for one reason or another, is canceled, the car loan is null and void and the borrower does not therefore has nothing to reimburse. Conversely, a borrower who cannot find a lender may cancel the sales contract without charge. Finally, an assigned car loan only begins to be reimbursed upon receipt of the vehicle by its owner.
Note that it is also possible to acquire a car by taking out other forms of less supervised loans.
What are the main characteristics of auto credit?
A personal loan allocated to the purchase of a vehicle has several characteristics to which the borrower must be attentive. We note for example:
- the amount of the loan: together with the contribution, it must cover the entire purchase and associated costs (registration card, registration, start-up, etc.);
- the duration of the credit: 36 months, 48 months, 60 months, 72 months and up to 84 months, it has a direct influence on the amount of the monthly payment;
- the interest rate: this is generally the first point of comparison for obtaining a cheap car loan. The booking fees must also be included in the calculation.
In all cases, a larger personal contribution makes it possible to decrease the amount to borrow and, consequently, to put you in debt a little less. Do not hesitate to postpone your purchase for two or three months if it would allow you to put an attractive sum on the table.
What are other types of auto loans?
The affected loan is not the only avenue for an individual who would like to finance the purchase of a new vehicle.
- The personal loan, because of its flexibility, is preferred by a number of borrowers. It makes it possible to request a sum of money of a certain amount without having to justify its use. No need, therefore, to produce a purchase order or proof of the same type. Be careful however: the borrower is also less protected, since a cancellation of the sale will not commit him to repay his credit. Also, note that the interest rates on a personal loan tend to be a little higher than those for a restricted loan.
- Rental has tended to develop very rapidly for several years. Rental with option to purchase (LOA), long-term rental (LLD) and balloon credit are the three versions. We no longer speak of monthly payments of credit, but of rents. The driver is the tenant of his vehicle. Please note: in LOA and balloon credit, it is possible to buy back the vehicle at the end of the contract, which is not the case for the LLD.
“Motorcycle credit” is another type of credit used for consumption. Very similar to car credit, it is also characterized by the loan of a sum of money by the bank for a specific purpose, namely the acquisition of a motorized two-wheeled vehicle (motorbikes, but also scooters or motorcycles ). The conditions of validity or cancellation of the credit are exactly the same as in the case of a car.
Cheap car credit: how to make the right choice?
Difficult to sort through the jungle of formulas all wanting to be more enticing than the others. However, it is possible to compare different car loan offers effectively by limiting oneself to a few determining criteria :
- The total effective rate (TEG), expressed in the form of an annualized percentage, reveals the total cost of the credit, that is to say the sum of the interest payable at the nominal rate and the possible handling fees “Commissions” or “miscellaneous costs”. The latter can increase the cost of credit considerably, and it is therefore important to monitor them. The TEG could also be expressed in the form of a precise amount in dollars, the total cost of the credit, which will represent the difference between the total amount reimbursed by the borrower and the amount originally borrowed.
- The duration of the credit is counted in months. For an equivalent loan amount, a longer term is equivalent to lower monthly payments, but also to a higher total cost of credit. In any case, it is recommended that you do not borrow for more than five years (60 months), which corresponds to the most conservative estimate of the life of your future vehicle. It is however possible to make a car loan up to a duration of 84 months in certain cases.
Car credit insurance: is it compulsory?
Loan insurance is not made compulsory by law for consumer credit and therefore for car credit. If the amount borrowed is significant in terms of your income or your savings, it is however recommended to insure yourself at least against death and total incapacity for work. The credit can thus be fully or partially reimbursed and you and your heirs will be protected.
Cheap car credit: how to find the best rate?
When buying a vehicle, finding the best deal for your car loan is sometimes a real challenge. Depending on your personal situation, the financing organization you choose, the promotional offers, the amount of the loan and the duration of the car loan, interest rates can vary significantly. Based on this observation, how do you know if the proposal you have obtained is interesting?
What are the best auto loan rates in 2019?
In order to compare the different car loan offers, it is essential to base yourself on comparable proposals in terms of the amount and duration of the loan. The APR is the preferred indicator to compare offers between them: it allows to take into account all costs related to credit. To give you a first idea, refer to the following table indicating the best rates it is possible to obtain in 2019.
Car (and motorcycle) credit
Best APR in 2019 for a car loan of $ 15,000 over a period of 12 months
In any case, do not hesitate to play the competition and turn to other players than traditional banks: take out a cheap car loan online is quite possible and very often saves money.
Example of a car loan simulation in 2019
In order to budget your project and to be able to know the amount of car loan that you can make, borrowing simulations are particularly recommended. For example, buying a car for $ 15,000 at an average interest rate of 1.98% represents the following monthly credit payments:
- 24 month auto loan: $ 637.97 per month;
- over 48 months: $ 325.30 per month;
- over 60 months: $ 262.79 per month.
The duration therefore greatly varies the share of the monthly budget allocated to financing a new or used car. It is necessary to take a certain margin to integrate the rest of the costs: maintenance, petrol, vehicle insurance, etc.
Cheap car credit: where and how to borrow?
Auto loans are offered by three main categories of lenders.
- Firstly, the car dealers themselves have an undeniable practical advantage: you can take out your car loan at the same time as you sign the contract for the sale of the vehicle. These loans, moreover, are very often integrated into a “pack” offering many other services, including vehicle insurance, breakdown assistance, an extension of guarantee or a vehicle maintenance subscription.
- Your bank, too, necessarily has an offer in terms of car loans. It is therefore recommended to make an appointment with your advisor to explain your project and examine the loan offer that will be made to you. This option is generally less expensive than a concessionary loan.
- Organizations specializing in auto credit, finally, have a wide range of formulas for the purchase of a personal vehicle and generally offer to take out auto loans at advantageous conditions directly online.
The methods of taking out a car loan are relatively simple. All you need to do is provide a photocopy of your identity document, a recent proof of address, a bank statement, proof of income or resources (salary slips, account statements, etc.) and of course a copy of the voucher. vehicle control.
How to buy cheap auto credit online?
In view of the profusion of loan offers from banks, dealers and credit organizations, the future driver has a large margin of maneuver to compete and choose the most competitive loan. Different online car loan comparators are able, from certain information related to your project (amount to borrow, type of vehicle, etc.), to instantly provide you with the list of the most interesting lenders.
With differences in TEG of up to 2 to 3% for the same financing, it is imperative to take care of the selection of your car loan at the best rate.