Want to invest in a new car? Buy a motorhome to cross the roads of France or offer you a boat to sail to new horizons? The car loan is then a solution to finance your next purchase. Before any engagement with your banker or your credit company, it will be necessary to inform you: Which are the best rates and how are they calculated? Under what conditions can one contract a credit? What are the terms of repayment?
The steps to obtain a car loan
The steps to get a loan are simple; it suffices to correspond to the profile required by the banks and to respect certain conditions. First of all, it is better to go to your bank’s website and do a credit simulation, in order to have on the one hand, a first approach to your loan application, and on the other hand to know if You are eligible. This simulation will also allow you to have an idea of your future monthly payments. The first condition of eligibility generally requires not to exceed 33% of debt capped by banks: for an income of 2500 $, you can pay 825 $ credit (2500 $ x 33% = 825 $) depending on its nature and its duration. It is better to have a few other credits in progress. In fact, it reduces your ability to borrow from your bank, which can deny you a loan. Finally, it is advisable to have a fixed-term contract (CDI) to ensure the security of your income with a banker.
Who has the most advantageous interest rate?
Generally, banks have lower interest rates than credit companies. In order to determine which bank has the most advantageous rate, the APR (Global Annual Effective Rate) must be compared. The latter is calculated by incorporating all the elements of the cost of your loan (insurance, fees and interest). This fixed actuarial rate is calculated on a proportional basis. It is therefore a standardized rate calculated in the same way by all lenders at national and European level. This common method of calculation allows consumers to easily compare the “all inclusive” price of different credit offers offered by financial institutions.
How is a car loan paid off?
Regarding loan repayment, banks offer several options depending on:
- Your borrowing capacity;
- The duration of your loan;
- His APR
- The amount of monthly payments previously defined.
In all cases, a credit commits you and must be repaid. Each month, you commit to pay a monthly installment including a portion of the borrowed capital, as well as interest. In general, the longer the duration of a loan, the higher the APR will be. Some banks impose a maximum repayment period (12, 24, 60 months …). Since the adoption of the European directive on consumer credit, the amount of credits is now limited to $ 75,000.