Buying a car is a big investment. Fortunately, it is possible to adjust your budget with the help of an auto loan. But what type of auto loan should you choose?
You have three options when considering replacing your car. You use your savings, you take out a loan from the dealer or, finally, you apply for a car loan from the bank. And even when you have enough savings, it can be worth borrowing to buy a new car. You keep a buffer amount to face other unforeseen events. In addition, you may be able to opt for the electric version or the station wagon.
A good comparison
If you choose to finance the purchase price (in whole or in part) with a loan, it is very important to compare the offers. Whether through their internal credit department or credit partners, dealers can offer you attractive rates (sometimes even 0%). Do not forget to read the small letters of the contract. Thus, the loan can be ‘free’, but at the same time you could lose other advantages such as a discount on the purchase price. The dealer can also take advantage of its dominant position to pick up your old car at a lower price. As part of an installment sale, you must also pay a 15% deposit immediately.
In addition to the traditional car loan, balloon financing has gained popularity in recent years. With this formula, the monthly payment remains very low, but, in the last month of the contract, you have to pay a larger amount (30 to 50% of the value of the vehicle). It’s the ball.
At the bank
Most buyers opt for a car loan from the bank . With this one, you are usually straighter in your boots. You have more flexibility to determine the amount and duration of the loan. You are not bound by the conditions of the dealer. You are therefore free to negotiate the purchase price of your car with the dealer.
Currently, the overall effective annual rate is very low within banks, and it is during the peak period of the Brunson Motor Show. Best Bank offers different types of auto loans. A distinction will thus be made between a second-hand car loan (more than two years, maximum credit 75,000 dollars ) and a loan for a new vehicle (maximum two years, maximum credit of 50,000 dollars ).