Do you want to finance the purchase of a car? If that is the case, we will explain what ways exist to do it and if it is better to do it with your bank or with the dealer and how much it will cost you. In addition, we present a selection of the most attractive car loans so that you can finance the purchase of your new or used car at the best price.
What Vehicles Can I Finance With A Car Loan?
We can finance any type of vehicle with a personal loan, from cars to SUVs or motorhomes. The usual thing is that with a car loan you want to finance the following types of vehicles.
*In second-hand cars, we can only request financing at dealerships if the vehicle is sold by the brand. If we buy the vehicle from an individual, we can only go to bank loans or Credit Financial Institutions (EFC).
At Swissvans we continually analyze the financing market to find the loans that currently offer the best conditions such as “ford transit custom lease”, you can see here. Discover the cheapest offers to finance your car!
What Alternatives Are There To Finance A Car?
Buying a car in cash represents an extraordinary and even impossible effort for many people. For those who are not willing to wait so long to save to pay in cash or simply need to buy their first car or change the one they had for a new one, there are different products that will allow us to finance the purchase of a new or second-hand car. We explain what they are:
- Personal loans in banks
- Credits in financial entities
- Dealer Financing
- Personal loans in banks
Banks offer loans to buy new or second-hand cars, and some even have their own stock of cars that may be of interest to you. Banks allow financing the purchase of vehicles with amounts less than 6,000 euros. Here we summarize the points for and against bank car loans.
Advantages:
- Banks are known for offering competitive rates. According to our study, the three cheapest are BBVA, ING and Santander, with an average of 5.08% APR.
- They are more transparent than dealers when it comes to granting loans.
- If it is the bank in which you have contracted more financial products, this will probably benefit you when obtaining better financing options, since your link to the entity is greater.
Alternative Car Financing Methods
Leasing and renting are two financing models for the enjoyment of a very useful asset for both individuals and companies. It must be clear that no formula is better than another, but each one has its peculiarities and can benefit depending on each specific situation.
Leasing: Flexible Financing
Leasing is a type of financing that works like a rental with option to buy. The company, usually a dealership, assigns the use of a vehicle to the customer in exchange for the payment of a monthly fee. When the term of the contract ends, which is usually about 4 years, we are given the following options:
- Pay what is left to keep the vehicle.
- Return the car to the dealer.
- Sign a new leasing contract to acquire another model.
‘Renting’: Long-Term Rental
Leasing is nothing more than the long-term rental of the vehicle. As it is a rental, we will not have to pay the entrance of the car and it is the dealer who remains the owner of the vehicle. In addition, the monthly installments are usually lower than in other financing models and will include other expenses such as registration tax, insurance and maintenance. However, with this alternative the car will never be ours and at the end of the term (generally three years) we will have to decide whether to return the vehicle or extend the leasing contract.
How To Choose The Best Car Loan?
To get a good deal when it comes to financing a car, it is important to know what characteristics are the most important and those that will most affect the cost of the car loan in order to find the best one. These characteristics are:
- APR below average: Currently, the average of consumer loans is 7.52%. Therefore, any offer with a lower interest will be considered cheap.
- No commissions: Since it will allow us to save a little due to the additional costs caused by the payment of taxes, the entrance and the rest of associated costs, such as registration
Without ties, since they can extend the granting of the car loan more and can involve more expenses that we may not want.
What Is The Cost Of Financing A Car?
Financing the purchase of a new car allows us to pay for the vehicle in installments, but it also has a price. For this reason, before going to a financial institution or dealer, it is important that we know what are the costs that we will have to face both for the acquisition of the car and for its financing:
Obviously, if an entity lends us money to buy a car, it will want to receive additional money to obtain benefits. In addition, you may also charge us for the steps taken to finance the vehicle. Let’s see how all these expenses are:
- The nominal interest rate (TIN): Is a percentage that is applied to the amount financed. In the case of car financing, it is usually between 6% and 10%.
- Commissions: They are specific payments that some entities charge for certain operations.
- Opening and study: They are usually between 1% and 3% and are paid when formalizing the contract.
- For early amortization: It can be 1% if there is more than one year left for the expiration of the contract or up to 0.5% if there is one year or less left.
- Linkage expenses: On certain occasions, to pay for the car in installments, it will be necessary to subscribe to additional products, such as life insurance or a credit card, for example.
- Notary fees: It is not the most common, but it is possible that the bank asks us to sign the credit before a notary, whose fees we will have to pay.
