Many banks offer auto loans. They differ from each other in terms of their terms, requirements for borrowers and machines, registration methods, and other parameters. To choose the most profitable option, all these conditions must be taken into account.
When is it profitable to ask for a car loan?
A car loan is suitable for those who want to buy a new or used car and at the same time will be able to pay the debt on time. You will immediately receive enough to pay the full cost of the car. In this case, it will be necessary to pay an insurance premium. Also, the purchased car must meet the bank’s requirements.
As an alternative to a car loan, they often offer to take out a consumer loan to pay it off at the expense of the cost of the car. At the same time, no tax will be imposed on the car. However, the amount of a consumer loan may not be sufficient for your purpose and the amount of the overpayment may be higher.
Another alternative is leasing: long-term car rental with an option to buy. It’s easier to issue it, and at the end of the term, you can buy the car or return it to the leasing company. However, the lease overpayment may be higher and the car will remain the property of the leasing company for the entire period. This method is suitable for you if you do not plan to use the machine for a long time.
Bank conditions in car loans
The conditions for auto loans in most banks are calculated in the same way. They depend on the characteristics of the borrower and the machine, as well as the requirements of the bank. First of all, you need to pay attention to the following points:
The loan amount is calculated based on the value of the car. Depending on the age, the mileage of the brand can be overestimated or underestimated.
The term of the loan depends on the amount and the make of the car. For foreign cars, it may be longer than for domestic cars.
The down payment can range from 10% to 15% of the cost of the car. It is calculated based on the creditworthiness of the borrower.
The interest rate depends on the borrower’s parameters, the amount of the down payment, the banking conditions, and other factors.
The borrower is subject to the same requirements as to when obtaining a cash loan: a certain age, registration in the region of the presence of the bank, sufficiently high solvency, and positive credit history. It may be necessary to attract co-borrowers or guarantors if the bank considers the client to be insufficiently solvent.
How to take a car loan with minimal interest
It is very difficult to obtain the minimum interest rate for a car loan. Banks have many requirements to obtain it. The following will help you significantly reduce your loan interest:
- Positive credit history
- High income and formal employment
- Provide a large down payment
- The attraction of one or more co-borrowers
- Receive a salary on a bank card or use your other services
- No convictions and account blocking
If you have not yet used the state program and meet its requirements, you can get a discount because of it. Please note that you can only use one state program at a time.