In the conditions of large cities, a car is more likely not a luxury, but a necessity. Today, almost every third resident of the Russian Federation has his own vehicle. However, not everyone can buy a car, and most often people resort to obtaining a loan to buy a car.
Today there are a huge number of various programs for which you can get a loan. Car dealerships offer borrow money. Is it profitable to take a car loan? Are reviews positive or negative? Consider the opinion of experienced car owners regarding this issue, as well as possible pitfalls that a person may encounter.
Features of car loans
Speaking about whether a car loan is beneficial, you first need to understand that there are no loyal financial institutions. Both banks and car dealerships themselves, offering to take a loan from them, have one single goal - making a profit. You need to understand that a credit institution is not a relative from whom it is possible to intercept money before salary. In any case, a certain percentage will have to be paid for the use of funds.
Nevertheless, this procedure is very beneficial, because a person can receive a fairly large amount once, while it will take many years to save up for a car on his own.
However, before concluding a contract, it is necessary to approach the issue with a clear head. You need to understand whether a car loan is beneficial. Feedback from other borrowers in this matter will be very useful. Experienced car owners recommend paying attention to the maximum loan amount, interest rate and down payment amount.
It is also worth considering the additional commission and the period that is given to repay the loan. You need to understand that in cooperation with any financial structure there is a risk of overpaying too much. Most often, no one hides these indicators. The problem is that the potential car owners themselves do not want to waste time studying in detail the contract that they sign.
First of all, it is worth understanding that the main guarantee for obtaining a car loan is the car on which this money is being spent. If something happens to him during this time, then this can result in quite a lot of costs. You also need to understand that before the full payment of such a loan, you can’t sell your car in any case. The same goes for gifts or exchanges.
Among other things, when talking about whether a car loan is beneficial, it is worth considering that a new car should be insured. This is a prerequisite for obtaining a loan. On this basis, there is an increasing number of extra expenses. Therefore, it is worth considering in more detail the conditions of lending, or rather those moments that look completely different than what appears to be the employees of credit organizations themselves.
Increase in premiums
If a person takes a loan from a bank, then, as a rule, he is recommended to insure himself at certain companies, which, in fact, are partners of a financial institution. At the same time, the bank receives its commission for each customer sent. But a person who wants to borrow money, on the contrary, has to pay quite a lot.
If we are talking about the acquisition of a new vehicle, then under the contract a car dealership may oblige the client to insure the car immediately for the entire loan repayment period. This will result in a pretty decent amount of money. However, one important nuance must be taken into account. No institution has the right to force its customers to bring insurance policies. If a person does not want to perform this procedure, then he has the legal right to refuse it. In this case, the lender can only increase the interest rate on the loan, which again casts doubt on whether the car loan is beneficial.
Life insurance imposition
In addition to insuring the vehicle itself, car dealership staff may require you to bring a policy confirming that the borrower himself is insured against death or disability. Similar certificates are also expensive.
As in the first case, the client is not required to fulfill these requirements.
Without hull insurance
This slogan is very common in conscription statements of many car dealerships. Indeed, some banks today can provide loans without requiring a CASCO certificate. However, do not flatter yourself about this. The fact is that in this case really no one will force to bring insurance. Lenders will simply increase the interest rate, and in the end the amount will not change. Is a car loan profitable under such conditions? No, but the borrower does not lose anything. He will simply pay the same amount, believing that he won the overpayment.
Are there low interest rates?
Many people are interested in whether a car loan with a residual payment is beneficial if the overpayment is reduced.
This is another trick often used by car dealerships and banks. The purpose of this psychological move is to impress upon the person that the interest rate has been reduced to such a minimum that, in fact, the person will practically not overpay anything. Is it really?
You need to understand that there is a general credit rate, which rarely someone changes. These figures are only relative, and no one assures the client that they will really be indicated in the contract.
Even if the contract states that the overpayment will be 2% per annum, a little lower, upon a detailed examination of the document, you can find a small print that lists the additional commissions that will very quickly cover the reduced annual percentage. As a result, the client will still make a rather impressive overpayment. You need to understand that it is unprofitable for a bank to give money for a long term almost free of charge, no one will ever do this.
Interest free loans
We move on to the next pitfall, which sounds even more absurd. Such loans, which indicate that the overpayment will be completely zero, should be bypassed for several kilometers. The fact is that behind such attractive slogans the most unattractive terms of the contract are most often hidden.
Even if the company is conscientious, you need to understand that in this case, most likely, you will have to pay 50% of the cost of the car as a down payment. Also, most often the lending period should be no more than 1 year. If the payoff period, on the contrary, is many years, then there may be another trick. The fact is that many, arguing whether it is profitable to repay a car loan ahead of schedule, decide to pay the balance immediately. However, according to some agreements, this is prohibited.
In addition, you will have to insure the vehicle exactly in the place where the bank representative himself indicates. In any case, an interest-free loan will be beneficial only to the organization that provides cash loans. A potential car owner can never win anything on this. Even if the down payment is 0% of the cost of the vehicle, then most likely this will mean that the subsequent interest rate has been increased.
What to look for when buying a car on credit
In order not to get into the financial hole, it is first of all not recommended to rush. The contract needs to be studied in detail. It is advisable to show it to a third-party lawyer. If an employee of a car dealership or a bank insists that this is a standard contract, then it is worth considering whether the loan provided will not be a hoax.
It is not recommended to sign an agreement immediately in any case. If a person is not familiar with jurisprudence and does not know the laws, then it is best to take a contract with you home and familiarize yourself with it in detail. It is recommended that the most attention be paid to the numbers indicated in the contract, especially those that are written in small print.
Does it make sense to take a car loan from a bank?
Is a car loan profitable? Or is a consumer bank loan better? You need to understand that loans at a car dealership are, by and large, the same thing, if the registration took place at the same bank. Only in this case, the car dealership plays the role of an intermediary. It is easy to guess that when carrying out such a procedure, a large percentage will be charged from a person, because a car dealership also needs to get some benefit. It is much easier to contact the bank directly.
Is car loan refinancing profitable?
It is usually very difficult to answer this question, however, if it comes to buying a car, then such re-lending is indeed a rather profitable solution. However, it all depends on the conditions of a particular credit institution. If after the transaction is completed the loan conditions are the same, it will be to some extent more convenient for the potential car owner.
However, you should not try to optimize your expenses or reduce the total amount. In any case, this will not work. You need to understand that refinancing is exactly the same target loan, which is simply taken in order to repay an existing loan. Accordingly, the amount by and large will not change. It is much easier to immediately take money from a bank in order to purchase a telephone exchange.
Is it profitable to take a car loan at a car dealership? In terms of costs, there is no difference. However, when applying for a loan at the bank, there is a chance to get benefits.