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The car loan is a consumer loan, which means that it cannot exceed an amount of 75,000 dollars. This loan is said to be affected, that is to say it can only be obtained by providing a supporting document, it can be a quote, an invoice or any document relating to the sale of a vehicle. This makes it possible to link the sale to credit, that is to say that if the sale fails, the borrower does not have to repay the loan.
Within the framework of a free amount, without allocation to a sale or transfer of car, it is preferable to resort to the personal loan. There are different types of car loans, the classic credit with repayment according to a schedule and the rental with option to buy, contract including a monthly payment but also the maintenance of the vehicle with at the end of the contract a clause allowing to buy the car definitively. .
Car, car, motorcycle loan: features
Rate: the rate offered on this type of financing is generally fixed, some organizations express themselves in APR and others in nominal rate or debit rate. It is the APR (annual effective annual rate) which determines the cost of credit. The borrowing rate or nominal rate is always lower than the APR, do not be fooled!
Duration: the proposed duration ranges from 1 to 7 years. It is generally expressed in months and adapts to the borrowing capacity of the household. Good to know: it is recommended to leave for short repayment periods, for a period at least equivalent to the guarantee for a new vehicle for example. Beyond that, it is more complicated to be able to change vehicles.
Type of financing: who says car loan does not necessarily mean car. The car loan can also be used to finance the purchase of a motorcycle, a bicycle, a boat, a truck, van, scooter, a caravan or a campsite. -because. The loan can also concern a new vehicle or a used vehicle, regardless of the engine (diesel, petrol, hybrid, electric) and CO² emission. Penalties are now applied to polluting cars, to be taken into account in financing.
Insurance: loan insurance is not car insurance, they are two different things. Borrower insurance covers debt repayment in the event of temporary, permanent incapacity or death. It is not compulsory but highly recommended.
Car credit: rental with purchase option
The LOA (rental with option to buy) is a car loan in the form of rental. That is to say, a contract is established between the concession offering the car (see how to book a test drive) and the borrower. In this contract, one can find there the modalities of maintenance of the vehicle as well as the repayment modalities and therefore the loan conditions.
The monthly payment then includes the reimbursement of part of the cost of the vehicle, interest and also covers the costs related to maintenance. These contracts, generally offered over a period of 2 years, make it possible to change vehicles very regularly and to have a recent car. At the end of the contract, the borrower can either re-engage for a new period, or buy the vehicle by paying the requested amount, or not follow up. If the LOA makes it possible to reduce the management of vehicle financing and maintenance to the strict minimum, this type of financing is costly over time, it all depends on the expectations of the household on this type of credit and on the willingness or not of 'have a recent vehicle.