How does financing a car work?

car

Buying a vehicle is one of the biggest expenses that we are going to have to face in our lives. For this reason, in recent years a large number of options have emerged that allow this expense to be cushioned as much as possible. Allowing the buyer to be able to divide the payment into different installments according to their economic capacities. Today we analyze how financing a car works.

The most popular formula

Of all the existing formulas, financing is one of the most popular. As with the purchase of any other material good, financing consists of a capital loan from a third party. This loan must be used in its entirety to carry out the purchase of a vehicle. The contract holder agrees to repay the amount of debt in monthly installments. In addition, you must also face the interests (in the event that there are any), as well as the rest of the conditions reflected in it.

How many types of financing are there?

Contrary to what happens in other markets, there are different types of financing according to the characteristics of the place where we make the purchase. Here are the main ones.

1- Bank financing

Bank financing is one of the most used options. These types of solutions base their nature on the request for a personal loan for the purchase of a new car.

However, some banks already offer the car loan option. Especially suitable for this type of product.

2- Financing by dealer

Manufacturers have been offering, for several years now, an internal financing service through dealersIn most cases, the interest rate is usually somewhat higher than that of the banks. In addition to assuming some obstacles when canceling the loan in advance.

In addition, it has the particularity that they do not allow the car to be sold before the financing is finished.

3- Leasing

Vehicle leasing is an increasingly popular option. Offering the possibility of paying a fixed monthly fee and, in exchange, having a new car with comprehensive insurance included. As well as what is related to repairs or maintenance costs, if any.

At the end of the contract, we can decide whether to pay the missing amount in a single payment and keep the vehicle or return it to the dealer.

Financing is one of the most popular ways we can choose to find the vehicle we need. At Impocars CGV you can find a wide variety of options to choose from. What are you waiting for to find the car of your dreams?

Car financing is not exclusive to the new car market, although less common, it is also possible to finance the purchase of a second-hand car.

The needs sometimes make us see ourselves forced to change the car and the cheapest option is usually the purchase of a second-hand car. But in most cases you have to pay for the car in cash and not all economies (especially if we are facing an emergency) can afford this type of payment. What alternatives are there?

Sellers that offer the possibility of financing

An important part of the sale of second-hand cars is carried out through specialized companies or dealers. These types of companies usually offer car financing facilities, making it possible to pay in installments. Even, sometimes, the financed price of the car is less than the price if it were paid in cash. Many of them also include being able to leave the old car as part of the payment.

In addition, by law, buying the car from this type of company means that the car has an additional guarantee, making it a safer purchase.

Many of this car buying and selling companies publish their cars, being able to filter the different offers between private and professional sellers.

Reach an agreement with the seller to pay in installments

When buying from an individual there is also the possibility of splitting the payments if the seller agrees to it. It is difficult for this possibility to occur since normally private sellers prefer to receive the money in cash.

If the buyer and seller agree to carry out the sale in installments, this must be established as one more clause in the contract. It is necessary to indicate in this clause of the contract the total amount that the car costs, the number of installments that are going to be fixed, the amount that the seller is going to receive in each of those installments, and the way in which it is going to be paid.

The last option is to borrow money from a bank, there are two ways in which they can lend us money:

  • If it is a payment of fewer than 3,000 euros, you can make the payment by credit card. This option is very customizable since it allows you to decide the terms and how much is paid per month. Of course, in consideration, the commissions are usually very high.
  • Go to the bank to get a loan, this loan can be personal or what banks call a ‘car loan’ designed for these cases. The interest will be less than what you would pay if you did it with a credit card and also the payment method can be customized, in addition, it is likely that if you have been in the bank for a long time you will have pre-approved loans.
By aamritri

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