Buying a car, whether it is a new, second-hand, zero-kilometer or second-hand car, is an important purchase that usually requires you to take out a loan to be able to do with the car you want since it is really difficult to have saved in your account the Amount needed to pay for the car without financing and less in the current times.
Buying a car is not easy. Visits dealers, make comparisons, questions to family and friends, it takes time and then there is the decision to choose the best credit to buy a car .
A loan focused on the purchase of a car must fulfill a series of important characteristics that we will see throughout the article and that will help you make this decision more bearable.
The most interesting car purchase credits
With the crisis, the sale of cars dropped dramatically and although in recent months something has rebounded it is still very low compared to the levels it reached in 2007-2008.
This has caused that there are good financing products, especially launched by the dealers’ financial institutions to help the buyer and increase sales.
There is also a more suitable time to buy a car and this moment is precisely at the end of the year.
The reason is that dealers have car sales objectives that they meet every year and if the end of the year is approaching and they have not reached their quota they usually prefer to lower and improve the conditions of the credits to buy a car and thus improve sales and achieve the goal.
After these general considerations we will see some more concrete advice so that you hire a good credit that does not unbalance your monthly budget.
– Set a maximum amount to spend : To not go crazy and not fall into the temptation to spend more on both the car and its equipment it is better that you put an expense limit and do not exceed it under any circumstances.
It is important that it is a realistic amount, depending on the car you want to buy, and also that it is in line with your financial situation.
– Beware of extra expenses : Do not forget that in addition to the purchase of the car you will also have other additional expenses and not precisely small. I talk about the traffic tax or the registration tax.
Keep this kind of extra expenses in mind when applying for a loan to buy a car.
– Learn about other ways to buy a car : In the market there are other ways to have a car that does not involve your purchase. We already saw it when we talked about
the main alternative methods of financing for companies
which can also be used by individuals, I talk about renting and leasing. Check out the article that linked you to have more information on these topics.
– Short time periods : If you are going to apply for a loan to buy a car, it is best that it be as short as possible.
The reason is that with small periods of time you will pay less interest although the counterpart is that the monthly fee to be paid is greater.
However, if you can afford to pay this higher fee, it will be better than choosing a longer period of time. Your pocket will thank you.
Apply for credit for your car at the dealership
As I said, due to the current economic situation and the few sales, it is possible that at this time it is better to apply for a loan to buy a car at the dealership than anywhere else.
Look at the data provided by the National Association of Motor Vehicle Sellers, in 2007 only 30% of the credits granted to buy a car were given by dealers, currently that amount has risen to more than 60%.
But what advantages does the concessionaire’s financial have over the bank?
Mainly there are 3 its advantages:
If you contract the loan with the dealership you will not have to search, compare and investigate among the loans to buy a car from the banks with the time savings that entails.
On the other hand, the current interest rate applied by dealers’ finances is usually lower, to increase sales both because of the crisis and because they are at the end of the year.
It is also quite common for the dealer to accept your used car and lower your credit conditions. It is true that you will get less money than if you sold it on your own but credit improvements can compensate.
Request credit for your car at the bank
However, also requesting the loan at the dealership has its disadvantages as we will see below.
The main one is that due to the greater facilities to grant you the credit, dealerships require that you take out life insurance and / or payment protection insurance.
The cost of both insurances is added to the amount financed so that the interest of the credit will be applied which increases the cost of the same.
Another disadvantage is that dealers do not finance the purchase of cars with a value lower than € 6,000, so if your car is of less value, you will have to go to the bank.
It is also quite common for the dealer’s financial company to require you to register the car in the Registry of Movable Property. And what’s wrong with this? You may not be able to sell it until you pay the entire loan.
As you can see, everything that glitters when applying for a loan to buy a car at a dealership is not gold and banks also have their advantages.
As almost always, depending on the car you want to buy and your needs and economic situation you will be interested in one option or another.
If you have any questions or want to expand the information in Elliot family we will be happy to help you choose the best credit to buy a possible car .