It is the captive banks that today create a new scheme for car loans, which is gaining momentum, expanding the financial capabilities of customers. What is this about?
Basic concepts
Such a concept, and sometimes you can meet the term "captive bank", is still little known to Russian borrowers. Such financial institutions issue car loans directly from manufacturers. They usually specialize in one brand. Captive banks are structures that are also called “pocket banks,” because they are created to serve the interests of a single financial industrial group. Ignoring the name, which is so difficult to understand, let’s try to figure out further what the matter is.
From what commercial banks offer, a car loan from the manufacturer is traditionally distinguished by more attractive rates. The main function of such a loan is to increase sales of the group's products. But the rest of the parameters of captive banks are quite standard: the maximum loan term is 5 years, and a down payment will be needed (15-20 percent), comprehensive insurance is required. Non-standard conditions of car loans from the manufacturer (where the down payment is 10 percent, there is no insurance, etc.) in the market can also be found. But at the same time, interest rates are very high.
Periodically, captive banks launch shares on car loans, under which the loan can be obtained under attractive conditions or without a down payment.
Disadvantages of classic loan purchase schemes for cars using banks
Current rates on car loans are a source of high bank profit, and the terms of such loans are still quite difficult for car enthusiasts. To purchase a car on credit, first the person goes to the bank, then to the car dealership, then selects the vehicle and drives away.
The same scheme, but in a slightly different version: a person goes to a car dealership, chooses a car, turns to a bank representative who is located in the store, waits for loan approval, and drives off with a new transport. But in this case there are always four participants: it is a manufacturer, a bank, a car dealership, an end user (a car buyer on credit).
Thus, there are always intermediaries between manufacturers and end customers who also require remuneration for their labor. And the corresponding financial burden is placed on the borrower.
What scheme is offered by auto loans by captive banks?
An unconventional captive scheme assumes that the producer and the financial organization for the consumer are, as it were, combined in one person. For example, a bank called Tokyo-Mitsubishi serves only Japanese automobile companies operating in our country. The advantage of such a scheme for borrowers: the less intermediaries there are, the cheaper it will cost to buy a car.
In addition, captive structures give the most interesting offer not only for the model range of the brand being sold, but also for the entire package of this product. For example, Toyota Bank offers to purchase all the complete sets: Comfort, Elegance and Prestige. And in addition, the collection of necessary documentation is reduced. BMW Bank gives you the opportunity to become the owner of a car in just a couple of documents.
Which banks operate according to this scheme?
Captive banks are primarily the well-known Toyota Bank, Mercedes-Benz Bank, BMW Bank and others. It is easy to guess which automobile brands are promoted by them. It is fair to say that the above organizations are not included in the list of leading ones, because the traditional scheme for car loans is still ahead. And there are reasons for this:
- Despite the high prices, Russian cars are being sold with state support. The loan program for domestic cars was developed by Russian financial organizations that are accredited by the government. An example of a captive domestic bank is Lada-Credit, which is closely associated with the auto industry represented by AvtoVAZ.
- The traditional schemes of car loans provide freedom of choice of the brand, while captive structures promote only their own ones, realizing the need of customers for reliable transport of Japanese and German production. Their goal is to increase brand loyalty.
Where can I find a "bank on wheels"
Representative offices of captive banks today are easy to find in car dealerships that are official dealers of brands BMW, Toyota, Mercedes-Benz. Of course, there the client will also meet with representatives of universal financial organizations, but here car loan programs will differ significantly.
If a person is not interested in any other products, that is, does not plan to take a consumer loan, for example, from Sberbank, then you need to use the services of a captive bank for car manufacturers. If you plan to buy Toyota, then you should go to Toyota Bank, which, in addition to low rates on the program, will please the tire service.
Before going to the salon, you should definitely familiarize yourself with the information on banking sites. There you can find out about special promotions, choose a suitable car loan program, find a loan calculator. But such programs have certain periods, so the interest rate may vary.
BMW on credit
Consider how the popular captive car loan bank works. Buying BMW cars is very simple. For example, BMW Bank offers more than ten programs; special offers have been developed for diplomats and corporate clients. In addition to foreign cars, you can easily become the owner of a motorcycle of the same brand. The initial rate on car loans is 6.75 percent. The borrower must be between eighteen and sixty-five years old. Any documents with memos can be downloaded to a computer, and then printed. You can find out how to get a loan for the purchase of BMW from the step-by-step instructions. In addition, the client will most likely be offered comprehensive insurance without additional information.
In conclusion
In the event that a person already has its own financial structure, which suits him absolutely in everything, you need to contact a credit institution that he trusts. If this is absent, and he is interested in specific brands, then you should look for a pocket bank.
The fact is that it is much more profitable for specific car manufacturers to create their own bank in order to provide customers with the best conditions. Thus, experts predict the sustainable development of such a car loan system.
We examined what it is - a captive bank. We hope the information provided in the article was useful.