Need a car loan? Here are all the elements to understand this type of consumer credit and its advantages to finance the acquisition of a vehicle.
An auto loan is an affected consumer credit. This means that it is intended for the purchase of a specific object, here a new or used vehicle. The borrower must therefore provide the lender with proof of the use of the borrowed amount. The interest rate (expressed as a percentage of the loan amount) is used to set the amount to be repaid by the borrower and can vary from lender to lender.
A credit allocated to the purchase of a car
The automobile credit, more often called “car credit”, is a consumer credit allocated to the purchase of a motor vehicle. An individual who does not have sufficient funds to purchase a car, both new and used, can apply for a loan from a bank or credit platform. The requested financial institution will then have to pay the purchase of the vehicle to its seller (dealer, private individual, etc.) and the borrower will have to repay, as for any credit, the paid-up capital and the interest provided for in the loan agreement. .
What are the benefits of a car loan?
Subscription to a car loan has the most obvious advantage of allowing the acquisition of a car to a person or a home that does not have the means to buy cash. It should also be noted that the amount of the car loan may include the cost of additional equipment (child seat, bike rack, etc.), registration card or other ongoing charges (insurance, maintenance, assistance, extended warranty, etc.). This allows the individual subscribing a car loan to afford a higher-end car or to buy additional accessories, without burdening its budget with a repayment spread over several months (12 to 72 usually).
How to get the best rate for a car loan?
In order to obtain the best rate and thus find the most advantageous offer according to your situation, you can use an online credit comparison tool. This will allow you to have a good overview of the different offers that you can compare according to the amount you need and according to the monthly payments you want to pay to repay your credit. Make sure that the rate of each credit is the annual percentage rate of charge (APR) because it is the one that will represent the total amount you will have to repay. When you have chosen the credit offer, before signing the contract, do not hesitate to negotiate the interest rate, especially regarding the application fees.