Today, buying a car is becoming an increasingly commonplace event. For many families, a car becomes a necessity in everyday life.
If the borrower meets the requirements of a credit institution, obtaining a loan to purchase a car is not difficult.
Almost always there are the following requirements:
- Registration on the territory of the country where you take the loan and the availability of documents confirming it;
- Constant and regular income in an amount sufficient for a monthly payment;
- In some cases, good credit history is needed.
A potential borrower must have a steady and stable income to get an auto loan. The salary presented in supporting documents has an important role. The planned monthly payment may not exceed 50% of the income received. However, a loan can also be obtained with a small personal income by attracting a co-borrower.
Getting a loan is easy. Let’s discuss how to get a loan to buy a car in order not to regret it later.
Advantages of Transactions Through a Bank and Car Dealerships
Modern technology allows you to get a loan at the place of purchase of the vehicle. This saves time and saves the buyer from additional running around the banks. However, the majority of car buyers on credit prefer to contact banks directly. The final decision is determined by the degree of satisfaction of the needs of the borrower.
If at this stage only the lowest rate is important, then a direct appeal to a credit institution will allow you to get a loan at 1-1.5% lower percentage, but in combination with the expansion of requirements for a package of documents and, possibly, with a large down payment.
Car dealerships usually work with several banks. If you look patiently, you can find stocks during which car dealers offer individual brands on credit at a rate below 3-5%. No bank can offer such conditions. It is a pity that such stocks are rare.
Car Loan Insurance
Car loans are collateral operations. The car purchased until the full repayment of the taken amount remains a pledge. In case of improper fulfillment of obligations by the debtor, the car may be taken and sold to repay the debt on the loan.
However, cars may break, suffer in traffic accidents, and get stolen. Therefore, many credit organizations prescribe compulsory insurance. The insurance policy gives benefits to both the bank and the new car owner. If the car is damaged, the car owner receives payment for repairs. If the car cannot be restored after the accident, then the insurance company will pay part of the outstanding debt.
The disadvantage is often a strong recommendation by the lender to get insurance with poor conditions. You should not hastily refuse the recommended insurance company. Just check your competitors’ offers. Verification conditions may turn out to be not only competitive but also better.