The times when the purchase of a used car was inseparably associated with a Sunday trip to the stock exchange, has passed forever. Today, the sachete, stuffed with banknotes, replaced a car loan. We advise what to do and what to look for in order to choose a solution that is fully adapted to your needs.
At the very beginning it is worth paying attention to the fact that when you decide to buy a vehicle, you can use both a cash loan and a car loan. The advantage of the first solution is unprecedented flexibility in spending funds, because financing is granted for any purpose. Thanks to this, nothing prevents you from buying even an old vehicle.
In turn, a car loan is a purposeful commitment, intended for the purchase of a specific vehicle, eg a car, motorcycle or caravan. The subject of financing becomes a loan security for the bank, thus lowering the risk related to the lack of repayment of the liability. It is mainly for this reason that a car loan is usually a cheaper solution than a cash loan.
Run a beauty contest
In an environment of increased competition, banks are constantly adapting their loan offer, trying to adapt to the changing market expectations. Regular analysis of the parameters of individual solutions is time-consuming and can give you a headache. For this reason, choosing the best offer is worth supporting with the car loan comparator. This tool allows you to quickly narrow down the search area and focus on solutions tailored to the current expectations and financial situation of the client.
Compare the most important costs associated with the loan
When we select the offers that are of interest to you, it is worth comparing items that directly affect the cost of the commitment. Let’s pay attention to such parameters as interest rate, commission, as well as the Real Yearly Interest Rate (APRC). It is also worth x-raying the costs associated with compulsory car insurance. This applies in particular to the AC policy, from which the assignment to the bank is one of the loan collateral. Thanks to this, the funder is sure to recover funds in the event of theft or damage to the vehicle.
Check the other conditions
Do not kid yourself. A loan for a new car will always be cheaper than a loan for a used car. In the end, the vehicle straight from the living room, each time will be a better security than a car for several years. If you plan to take out a loan for a used vehicle, you must take into account the need to make a contribution. By taking part in the purchase of a vehicle, the borrower reduces the risk of debt repayment. Depending on the client’s financial condition, the own contribution may vary from a few to several dozen percent of the vehicle’s value.
Another important aspect is the maximum period for which the bank will grant us funding. The principle often works here – the older the vehicle, the shorter the loan period. And so, deciding to finance a 5-year vehicle at Sebank, we can count on a maximum loan period of 96 months. In turn, when you take a loan for a 10-year-old vehicle, you have to reckon with the reduction of this period to 36 months. Another approach is presented by Santander Bank, which will finance the purchase of cars up to 12 years of age, but not older than 16 years at the time of paying off the last installment.
Remember to secure the loan
We have mentioned before that securing the car loan is usually the subject of financing itself. For this purpose, banks use:
- partial transfer, where the bank becomes a co-owner of the vehicle in 49%. Collateral is often accompanied by a vehicle card deposit, which prevents potential sale or re-registration of the vehicle,
- registered pledge, where the financed vehicle is registered in the register of pledges kept by the district court. If the loan is stopped, the bank may take over the subject of the pledge and sell it to satisfy claims,
- assignment from the rights of the AC policy, used as a complement to the transfer of ownership or registered pledge. Thanks to this, compensation resulting from the damage goes directly to the bank.
Depending on the financial and economic situation of the client, the lender may request additional security, eg a third party guarantee or a promissory note. When looking for the best loan offer, it is worth knowing in advance what kind of collateral the bank expects.
Car loan for a used vehicle – yes or no?
The answer to the question is not unambiguous. A lot depends on the vehicle itself, the purchase of which we intend to finance with the help of a loan. In the case of age groups, it may turn out that they are too old and do not constitute an appropriate security for a potential liability. In addition, the relation of the price of the old vehicle to the costs related to the compulsory AC policy, commission and costs of establishing other securities may prove to be unprofitable. In this situation, it is worth thinking about cash loans. In other cases, taking out a car loan may turn out to be the best solution.