The acquisition of a motor vehicle is one of the great classics of consumption. But his purchase requiring the mobilization of several thousand euros, many drivers want to finance it with a credit to spread over time payment. Given the many offers on the market, here is what you need to know before making your choice to benefit from the best rate.
Among the many forms of consumer credit, some are particularly suitable for the acquisition of a motor vehicle. For some time, financing formulas such as Long Term Rental (LDD) or Rental Option Purchase (LOA) have been on the rise, but they are not strictly speaking credits. This is a lease with the possibility of acquiring the vehicle at its conclusion. In terms of pure credit, that is, borrowing money to buy a car and paying back each month, there is the personal loan and the credit allocated.
The personal loan allows you to borrow a certain amount of money without having to specify what it will serve. Very flexible, it is the very type of consumer credit. In the case of a car, it is generally used in the case of the purchase of a second-hand vehicle from an individual. But since the loan is independent of the object purchased, if, for one reason or another, the purchase is not made, you will still have to repay your credit.
The assigned credit is, as its name suggests, exclusively dedicated to the purchase of a specific product. As a result, he benefits from special conditions. In the case of an automobile, if the delivery of the car is not made or is not in conformity, the sale is canceled and you have nothing to repay. Conversely, after agreement with the seller, if you can not find a lender, the sales contract becomes null and void. Finally, you only start paying back after receiving the vehicle.
In terms of auto credit, many organizations offer each more or less attractive formulas. In the case of consumer credit, your bank will probably be your first point of contact.
Car dealers have the advantage of allowing you to negotiate at the same time the purchase price of your vehicle and the conditions for obtaining credit, because all have financial subsidiaries.
There are also online banks that are starting to offer auto loans, as well as supermarkets, which often have very aggressive offers, but which require careful analysis.
Apart from the use of one of the many simulators or comparators of credits such as that proposed by Meilleurtaux.com, several points must be examined to sort between the various offers. In the same way, for a loan that will commit you for many months, you will have to make choices on the amount borrowed or the duration of the loan and check your borrowing capacity.
Once the dealership’s price offer is in your pocket, you need to decide how much of your savings you’ll put on the table as a personal contribution. As with any type of credit, the larger the amount, the less you will need to borrow.
Then comes the question of the duration of the credit: counted less, the longer it is, the lower the monthly payments, but the more the credit is expensive. Generally, for a car, it is advisable not to exceed 60 months, which is already a good life for your vehicle.
Note that many promotions, such as “0% special offer”, must be repaid for short periods, such as 12 or 24 months. Hence the importance of providing a significant personal contribution.
And we come to the essential question: how much will it cost? To determine the total cost of the credit, we refer to TEG, the overall effective rate, which represents the sum of the interest payable at the rate that the bank grants you, the nominal rate. We also speak of APR, annual percentage rate. Expressed in the form of an annual percentage, the TEG includes all ancillary costs: handling fees, insurance, guarantee, commissions and accessories, which must be carefully monitored or even negotiated. Another way of knowing the total cost of credit is to sum the monthly payments and deduct the capital borrowed.
Without being compulsory for consumer credit, the borrower insurance is recommended, at least for the risk of death or total incapacity.
Then you just have to compare credit offers on the market, either by submitting your application directly to each lender, or by doing the round of the market via a consumer credit comparator like that proposed by Meilleurtaux.com or by using a broker, an intermediary in banking operations used to finding the best offers.
Watch for promotions, checking that there are no “traps”. Remember to negotiate in your loan agreement a free early repayment clause. Do not go to bed too much. We never know what the future holds.
And remember that you are entitled to the error because you have 7 days after signing the loan agreement to retract, without any fees.