Car loan: rate, term, comparison

A car loan allows you to finance the purchase of a new or used car. This is a consumer loan that can be up to 75 euros. Its size, duration and rate depend on your borrowing ability and your ability to pay. It is important to compare car loans well in order to find the most interesting.

💰 Car loans: how does it work?

As the name implies, car loan it is a loan obtained to finance a car. It can be new or used. There are two types of car loans:

• Le Personal loan : This is a consumer loan, the amount of which can be used at your own discretion. The rate is freely set by the credit institution.
• Le affected credit : This is another type of consumer loan, this time planned, that is, allocated for a specific purchase, in this case for a car.

Whichever car loan you choose, it is a consumer loan. They can reach the maximum number 75 000 € and you have a right of withdrawal within 14 days from the date of signing the contract.

Personal loan repayment begins after this withdrawal period and when you receive the loan at your disposal.

When you take out a car loan, if the sale is canceled, the loan agreement is not executed at no cost to you. You start repaying the car loan from the moment you return the car.

Likewise, if you are unable to obtain a car loan, the sale of the car is considered null and void.

A car loan, be it a personal loan or a modified loan, consists of the same elements as any other loan:

• One longer term,, which is the repayment of the loan and plays a major role in calculating the amount of your monthly payments;
• Un personal contribution possible;
• Un speed in the form of interest, which includes interest on the loan, as well as insurance;
• One guaranteeexactly what is not required by law, but in fact is systematically required by credit institutions;
• of Monthly payments, or the amount you must pay each month and which cannot exceed one third of your income (this is called borrowing capacity);
• Un Total cost, which shows how much the loan is really worth to you, that is, the borrowed capital that you have to pay off, as well as the interest.

Remember that the total cost of a car loan is always more than the borrowed capital. Because at the end of the loan term, you have to pay off not only this capital, but also the interest on it, insurance and, finally, administrative expenses.

📅 Car loan: for how long?

The validity period of a car loan varies. It depends on the lending institution, as well as on your case and your ability to borrow money. However, the minimum term for the affected loan is 3 months. When buying a new car, it cannot exceed 84 Monthsпротив 72 for a used car.

On average, a car loan lasts 5 years... But the shorter the loan, the cheaper it is: indeed, a long loan requires more interest and more monthly payments. However, a short car loan has higher monthly payments because the loan repayment is less spread over time.

In short, the length of your car loan should be tailored to suit your budget. Your debt ratio should not exceed 33%This means that you cannot use more than a third of your monthly income to pay off the loan.

Therefore, it is important to perform an automatic simulation of the upstream loan. You will include not only your income, but also your expenses, including other loans that you may already have in the process (such as a mortgage). From there you will receive your borrowing capacity, that is, the amount you can expect to borrow and an estimate of your monthly payments.

📍 Where can I get a car loan?

Depending on the type of loan you have chosen, you have three options for obtaining a car loan:

• Bank or credit institution ;
• Insurance company ;
• Un dealer.

If you decide on an affected loan, you will have access to either of these options. Most banks do offer auto loans, as do large insurance companies such as MAAF or MACIF. Finally, you can take a car loan right at the place of purchase, at a car dealership.

If you choose a personal loan, you will have to contact a bank or credit institution. In any case, we advise you to do car loan modeling to find the best rate. Indeed, this varies greatly from institution to institution.

And even a small difference in the interest rate applied to the duration of your car loan can significantly affect the total cost of your loan!

🔍 Car loan: bank or concessionaire?

The most common car loan solution is loan assignment. You can conclude an agreement at the bank or directly at dealer from whom you buy your new car. The dealer then acts as an intermediary and the loan amount will be paid to him by the bank upon delivery of the vehicle.

So the advantage is that you don't have no extra steps make. The concessionaire can also offer beneficial formulas. Finally, it will be easier for you to negotiate the purchase of your vehicle.

However, a car loan taken directly from a dealer is not always the most interesting at a rate. Typically, you pay for a car loan cheap goes through bank.

Therefore, our advice when looking for cheap car loans is to conduct a simulation. You can also pass car loan comparator find the most favorable loan for you. Don't forget to compare insurance as well.

Indeed, if it is not legally bindinginsure your loan, banks usually refuse a loan without insurance. This will protect you and your beneficiaries if you find yourself unable to repay the car loan (job loss, disability, death, etc.). The insurance will pay off the loan for you.

📝 How to get a car loan?

To get a car loan, the first step is to apply for comparison of ratings and modeling your borrowing capacity. You will really need to select a lending institution at the best possible rate and then customize your file.

This includes a number of supporting documents:

• Identification : identity document, proof of address;
• Proof of income : last three payrolls, RIB, etc.;
• Loan confirmation : order form for a new car.

This last part is unnecessary if you choose to use a personal loan rather than an affected loan. This file is used to protect your loan application with the bank by confirming your solvency.

It is quite simply a matter of assessing your income, your expenses and offering a loan tailored to your situation. Therefore, the bank may ask you for additional documents. Be aware that you can ask a broker to help you compare the rates of different lending institutions, and that he can help you compile a file.

When the credit institution examines your case and solvency, he accepts or rejects your car loan application. If accepted, he will give you credit offert, which includes the maturity of loans, their amount and Annual Percentage Rate (APR).

In case of refusal, you may well make a request to another bank. The sale of the car is canceled without penalty.

If you accept the offer and sign it, you will have a 14-day think-over period after signing. You can shorten this period by contacting the car dealer in writing.

⏱️ Car loans: how long to have money?

The time it takes to release funds after obtaining a car loan varies. It depends on the amount, but primarily on the lender. Usually funds are paid although 1 semaines et al. 2 after signing the loan.

The minimum release period for funds is 7 Days... But since the withdrawal period is 14 days, most credit institutions prefer to wait until it is completed before repaying the car loan.

But don't panic: with a damaged credit, you won't start repaying the loan until the product arrives. No payment may be required until the credit is signed and the withdrawal period expires, even if you may be asked to make a deposit at checkout. It will be returned to you if the loan is denied or if you cancel the sale.

For a personal loan, repayment may not be required until the expiry of the withdrawal and release period. So you have nothing to worry about!

That's all, you know everything about car loans! As you may have realized by now, it is important to compare rates carefully to find the best auto loan. Prepare the file well to prove your ability to pay, especially since the best files are those that are borrowed on the best terms.