How to finance a car?
We tell you all the requirements and some tricks for you to obtain financing for a new car.
How to finance a car?
Dealer or bank? Do you want to finance a new car but do not know with what option you can save more money in the purchase? We review all the alternatives and we tell you all the tricks to ask for a credit without paying too many interests. Learn how to finance your car with simple reflections on economics.
Options to finance your car
Do you know what options you have to finance your car? Find out what they are:
- Ask for a loan from a bank. Just as it is customary to request a mortgage for the purchase of a flat, banks also offer financing for the purchase of new and second-hand vehicles. Until a few years ago the conditions used to be much stricter but nowadays they have relaxed a lot, so it is worthwhile to inform yourself.
- Request a loan directly from the dealer. They need to be more flexible than banks because in addition to the interest on the loan they also take the commission for the sale of the car.
- Investigate the conditions offered by the different entities before taking the final step. Know well what type of credit they offer you and ask yourself honestly if you are going to have problems paying it.
Types of loans
We summarize some of the most common concepts in vehicle financing. Remember to ask everything you do not understand, especially if you can do the financing without a payroll. Think that the advisors are here to help you.
Fixed. That means that until you pay the entire credit you will pay exactly the same each month, so the fee will be fixed. The fixed interest rate is the most common in loans for the purchase of cars.
Variable. The interest you will have to pay will vary according to the reference indicator (which in most cases is usually the Euribor). That means that you will pay more or less every month according to the fluctuation of the market.Flexible. Regardless of the interest rate you choose for financing, the loan will be flexible if the fees to be paid are lower during a given period of time. In this sense, many dealers usually make offers that include the gift of the first installments. If this is the case, calculate how much you actually save taking into account the interest you will have to pay in subsequent installments.
Opening commission. Ask if they will charge you an opening commission and how that will affect the total money you will have to pay.
Commission for amortization. If you expect to receive money in the future that allows you to pay part of the loan or the entire loan earlier than estimated, find out about amortization fees, anticipated or total.
Financing by leasing. Leasing allows you to pay a rent for a vehicle for a specific time, usually about 2 years. After this period you can take the decision if you want to buy, renew the rent or terminate the contract.
Financing by renting. The two main differences between leasing and renting is that the latter usually does not contemplate the purchase of the vehicle by the user, so the latter does not have to worry about additional expenses such as insurance or maintenance. There are tax advantages for both leasing and renting users.
Requirements to request financing
Although concessionaires are generally somewhat laxer than banks, the two entities will study your profile in detail before deciding whether or not to grant credit for the financing of your vehicle. The following data are usually reviewed as a minimum:
Age. Only those over 18 can apply for a loan.
Do not appear on any list of defaulters. If you did not return a previous loan or you stopped paying your last rent, you will probably appear on the list of defaulters and it will be practically impossible to get a new loan.
Your level of income: They will ask for your work contract and your last three payrolls to verify that with your income level you can pay the loan without problems. If they do not consider you suitable, they will most likely ask for an endorsement, that is, the signature of another person with a higher income level pledging to take over the payments when you can not.
Tricks to get the best financing for your car
When applying for a loan, the amount of interest you will have to pay in return will vary according to various variables. Two of the most important are the amount requested and the length of time you have to return the credit.
That’s why, before you even start looking at cars, study your debt possibilities thoroughly, taking into account your usual income and expenses.
The less amount you borrow, the less interest you have to pay and the cheaper the car will end up at the end.
When making calculations, also take into account other associated expenses such as the maintenance that your new car may need, the parking space, gasoline, tolls or insurance …
Once you have your car do not forget to hire your car insurance. The car insurance all risk of Muscle Car Facts is one of the most complete on the market. Learn!