Car loan or personal loan which is better? Our article

A personal car is the dream of many people, however, not everyone can afford to immediately pay the entire amount of the cost of the car. The question arises: where to get the missing money. The only answer is to contact the bank. Banks today willingly give the necessary money on credit, in addition, there are many car loan programs. So you can get the missing amount without problems.

But a bank is, first of all, a commercial structure interested in generating income, so you will receive money at fairly high interest rates.

Let's see what is more profitable - a car loan or a consumer loan?

Car loan

A car loan is a targeted loan. The client will not even be able to see this money in his account or in his hands. If the bank makes a positive decision, then this amount is immediately sent to the current account of the car dealership.

To get a car loan in most banks, you must meet the following conditions:

• confirm your income - you can be unemployed, but over the past few years you must have at least one year of experience, in some banks this is not taken so seriously, in state banks, in order to receive a loan, you need to be officially employed;
• the amount of your total income per month should not be lower than a certain level - roughly speaking, with an income of 10 thousand rubles, you will not be able to get a loan even for the most budgetary car;
• a prerequisite is the registration of CASCO insurance, and some banks may require you to take out voluntary medical insurance.

If we talk about interest rates, then they average from 10 to 20 percent per annum. Each bank puts forward its own conditions. For example, to get a lower interest rate, you need to be a bank client, receive a salary on a bank card, and provide as much information about yourself as possible.

An important point is that in order to apply for a car loan, you need to make an initial payment - from 10 percent of the car's value.

Consumer credit

A consumer loan is a non-targeted issuance of funds, you are free to spend them as you please. Credit cards are also considered consumer credit. The bank has no control over how you spend these funds.

However, the car acts as collateral if you apply for a car loan. The bank loses absolutely nothing in case of insolvency of the client - the car is confiscated and put up for sale. The guarantee of the repayment of the consumer loan amount is very, very high rates, which can reach 67 percent per annum, while on average rates range from 20-60 percent.

The bank does not put forward any special requirements for the client; to receive an amount of up to 250 thousand, you do not even need to confirm your income.

There are programs under which you can get cash on the security of property - an apartment, a car, a land plot, jewelry. The bank may also require the borrower to issue a VHI policy.

Which of these two options is better?

It is difficult to say unequivocally which of these two options is better. We will try to look through the eyes of the average buyer

Car loan:

• a down payment is required;
• it is necessary to issue CASCO;
• PTS remains in the bank.

If you calculate that the cost of CASCO per year is approximately 5-8 percent of the cost of the car, then you can add these percentages to the rate, it turns out that you owe not 15% per year, but 20. But your car is insured against all risks.

Consumer credit:

• high interest;
• no need to issue a CASCO;
• no down payment required.

Let's imagine several situations. For example, a person does not have enough 200 thousand to buy a car for 800 thousand. If he issues a car loan, it will turn out that his down payment will be 75 percent, he will be provided with very normal conditions - 15 percent per annum. For the year he overpays only 30 thousand. Let's add here the cost of CASCO (8 percent), it turns out 64 + 30 = 94 thousand.

If he took the same 200 thousand on credit at 30 percent, then 60 thousand overpayment would come out. Plus, add more CASCO, although he may not draw it up, but if the car is stolen or there is an accident, then the person will be left without money and without a car.

Definitely in this case, a car loan is better.

If you buy a used car on credit, and at the same time you do not need CASCO, because the car is in the garage, and you have a good driving experience, then, probably, in this case, a consumer loan would be preferable.

Well, the most common situation is when a person barely collected 10 percent of the cost and wants to take a car on credit for a maximum period of 5 years, then the overpayment will be huge for both programs, but for a car loan, nevertheless, you will have to overpay less, even including CASCO.

Conclusions

A car loan is preferable when you need to pay the majority of the cost of the car. If you are buying a used or new car, you lack a few tens of percent, and plan to pay all the money to the bank in a short time, then a consumer loan will be better.

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