Do you plan to buy a new or used car? To finance this project, you want to use auto credit but at what rate? Auto credit rate comparators will help you in your choice …
The characteristics of auto credit
The car loan is a consumer credit that is used to purchase a new or used car. It is granted by a bank or financial institution under certain conditions.
Auto credit: a consumer credit
Since the car loan is primarily a consumer credit, it is therefore subscribed according to the general terms and conditions of consumer credit.
For individuals, consumer credit allows the financing of the purchase of consumer goods and services other than real estate. The most telling examples of goods that fall into the consumer credit category are home appliances or an automobile.
Consumer credit is by nature a credit granted for relatively small amounts, repayments are made for a relatively short period of time and the guarantees required from the borrower are less 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.
The car loan is subject to the same withdrawal period after the signature as the consumer credit, ie 14 calendar days from the date of signature of the contract.
Legally, like any credit, the consumer credit and therefore the car loan engages the person who subscribes and must be repaid. The borrower must check his repayment capacity before subscribing.
Auto credit: an assigned credit
An appropriated credit is a credit granted for a purchase determined as a movable property or a service. As its name indicates the car loan is intended exclusively for the purchase of a new or used car. The auto loan finances the sale of a new or used car regardless of whether the seller is an individual, a mechanic or a dealer. The credit will be granted only if the purchase of the car is effective.
The purchase of the new car or used car being the condition of granting the credit car, it will be necessary to justify the purchase of this car from the credit agency. Most often, a quote, an invoice or the establishment of a purchase order from a dealer will provide this justification to the credit agency. Added to this are other proofs such as proof of identity, income, wealth. These documents are required to verify that this debt will not exceed 33% of your income. This rule of verification of your solvency is intended to protect you, as a borrower, to avoid over-indebtedness but also the lender who ensures your ability to repay.
If for any reason the delivery of the car is canceled, the cancellation of the credit will be automatic, although the financial institution has granted this credit. As a borrower if you do not get this auto loan, the sales contract will be void and you have nothing to repay. The refund of credit is therefore from the date of receipt of the car. To know also, under certain conditions in the event of disputes on the purchase contract, the refund can be suspended.
The car loan is therefore a consumer credit allocated to the purchase of a car. This is most reassuring for the borrower because he will not need to repay this credit if the car is not obtained.
This definition makes it possible to understand what the auto credit corresponds to, but concretely it consists of various elements that will make it possible to define its overall cost.
Components of auto credit
Different elements will concretely constitute the overall cost of your car loan.
First, to finance your purchase you can make a personal contribution. This is not mandatory but will reduce the selling price and therefore reduce the overall cost of credit.
The overall cost of the car loan also includes the annual percentage rate called APR. It will be set by the credit agency and may vary from one organization to another without exceeding the rate of wear. It is an annual percentage that represents the various elements allied to this credit, such as the nominal rate, application fees, commissions, insurance contributions.
The overall cost of your car loan will also depend on the length of the loan. Expressed in months or years, it shows you the duration of your debt and will 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 life of your future vehicle.
As a borrower you can also buy insurance. As for the contribution, this insurance is not mandatory but it ensures the borrower, and also the lender. This insurance is strongly recommended if the sum borrowed is important. For example, in the event of death, the insurer will cover your monthly payments.
The total cost of your car loan consists of the monthly payments which correspond to the amount that you must pay monthly to finance this credit.
Thus the components of your car credit depend on you but especially the lender to whom you will address. It also advised to make your choice to make a comparison between different lenders who offer different rates.
The auto credit rate comparator
As seen above, the cost of auto credit is determined according to items that are specific to your situation and therefore they will always be the same regardless of which lending agency you choose.
On the other hand other determinants of your auto credit can be highly variable from one lender to another. The item that will greatly alter the overall cost of your car loan from one lender to another is the rate.
This rate, more commonly known as the annual percentage rate of charge (APR), incorporates several elements:
- The nominal rate: it makes it possible to calculate the interests. Those are the credit agencies that will choose this nominal rate except for some loans or the law regulates directly as the zero rate loan. The lending institutions set the rate at which they could have borrowed and they add a margin that is specific to each lender because it results from charges, commercial policy or risks.
- Fees: This is what you will charge the loan agency for the study and the constitution of your file. These fees generally represent 1% and 1.5% of the amount borrowed.
- Contributions for insurance: insurance is not mandatory but if you subscribe the contributions will usually be included in the APR.
The lender has the obligation to show the APR in the loan offer he offers. The APR can not vary during the term of your loan. It is generally between 2.5% and 7.7% or even 10% for some specialized organizations. On the other hand, it can not exceed the usury rate, ie the maximum legal rate set each quarter by the Bank of Wiselords
The rate is the main point of comparison for choosing where to buy your car loan. To compare offers, you can directly use online comparators. Most comparators will ask for simple information to make their offers such as your contact information, your marital status, the desired amount, the desired repayment period, the type of new or used car and your income.
Namely, even if the rate is the element of comparison to which you must pay the most attention, you can take into account other notions like possibilities of redemption or of postponement of expiry.
The comparator will therefore have the function of offering you several credit offers for the same amount with rates that are already the most advantageous for you. Then it’s up to you as a 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 find out from a broker. Brokers are qualified to answer all 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 to know the monthly payments but the comparison allows you especially to find the cheapest car credit possible. Indeed, the rate being a tangible element that can increase or reduce the overall cost of your car credit, it is necessary above all to compare the offers to make your choice. top