Are you going to make a car financing or want to reduce the value of the current installments to save money by refinancing?
Buying a car in sight or making a car financing ( car credit) requires attention to the brand, model, color, year of manufacture, what the lowest interest rate they are offering in banks and dealerships with their own financing etc.
Of course one of the most important things when choosing which car to purchase for sure is where and how to take out the car loan for the best conditions . There are a plethora of opportunities to get yourself put in a stronger trading position and make you save a great deal of money over the term of the financing.
And if you already have car financing in progress, you can reduce your monthly payment and save money by refinancing the amount and installments. This is what we are going to talk about in this article:
- Car Financing
- Car Financing
- Vehicle purchase credit
- Loan to buy car
- Car financing for negatives
- Credit to finance new and used car
- Car financing without credit analysis
In recent years Brazilians have had the chance to realize one of their biggest dreams before buying their own home – to have their own car to come and go wherever they want. Here in Brazil, the authorization to drive is given from the age of 18, therefore, completed that age, the goal is to buy a new or used car, either the view or with auto financing.
Whoever wants to finance a vehicle, is looking for mobility, owning a car, when acquiring it, many benefits are incorporated into the purchase: gain time, freedom of movement, comfort and safety. But, like the current economy we have, few citizens can buy a vehicle with cash.
However, who has credit for access to car financing , you can certainly take advantage of buying a car with financing offered by your bank, the dealership or the carmaker’s bank that also finances the total or partial value of the car.
This alternative to hire a car financing is on the list of almost every Brazilian who works, if by chance you want to know more information on how to finance your new vehicle for personal or family transportation, keep reading this post.
Is it worth doing a vehicle financing?
- What is vehicle financing?
- How do you calculate the limit value of car financing?
- Total or partial financing of the value of the car or vehicle
- Advantages when financing your new or used car
- Car financing ways
- Using a credit card to finance a car
- Financing a car with a payroll or personal loan
- Compare interest rates on financing
- What to know before requesting and financing a car
- Is pre-approved car loan important?
- When to refinance your car financing?
Is it worth doing a vehicle financing?
This issue is somewhat controversial since many argue that yes others argue that not, especially that there is a disagreement among financial advisors on this subject. So it is possible that you have read many other advice on the internet paying cash is the surest thing.
On the other hand, let’s be realistic to know that most ordinary and hardworking people do not have $ 40,000 to $ 90,000,000, which is enough value to get a medium-sized vehicle paying cash on the spot.
However, keep in mind that it is totally legal to fund a vehicle when you do not have the full cash value. But be sure to note:
- You can pay the monthly installments of the financing
- Can you negotiate a better car price when you finance
- You’re smart enough to pick a car that does not devalue too fast
- You have good credit (score and rating) to get the best interest rate
- Payment of installments, taxes and insurance will not jeopardize your finances
Think of each item in this listing …
What is vehicle financing?
The car financing loan is a credit operation that banks, finance and cooperatives offer for individuals and businesses to buy new or used cars . When hiring the financing, the lending financial institution pays the total value of the car purchased by the buyer from the automaker, car sales store or the dealership.
The buyer, in turn, will repay the amount of the amount plus interest and other fees in installments during a term established in the agreement with the terms and conditions of the auto financing.
How do you calculate the limit value of car financing?
The limit of the amount or limit value approved for a vehicle financing is determined on the basis of the buyer’s income or salary, by law, the amount of money committed to this type of financing can not exceed 30% of the proven salary.
This limitation is to ensure that the buyer’s income is not compromised, or else it ensures that the debt settlement of the financing with the financial institution is completed minimizing the chances of a buyer becoming defaulted.
Total or partial financing of the value of the car or vehicle
When approved with a limit value to use to finance a car, the buyer does not need to use all the value to make the financing, let’s give three examples:
- Buyer is approved for $ 100,000, but wants to finance car of $ 89,000
- Buyer finances part of the car’s value by giving 30% cash
- Buyer of your used car as entry and makes the financing of the remainder
Note : When a buyer gives a cash entry or gives his car with entry, the entry is discounted from the value of the new car, this maneuver significantly reduces the amount of the outstanding balance and installments of the monthly repayment.
Advantages when financing your new or used car
- Enables the purchase of a new or used car without needing cash in sight
- It has the advantage of giving cash as part of the financed payment
- You can use another car with entrance to reduce interest, installments and amount financed
- After approval by the financier it is possible to go out riding a brand new car
- With the installment financing it is possible to organize better financially
- In auto financing it is possible to pay installments in advance to reduce interest
- Carries out the financing with the carmaker’s bank the interest rate may be lower
Car financing ways
There are two types of car financing for you to buy the car of your dreams. It is important to know the difference between them, since each type of financing will have a different impact on the form of the contract and interest rates. Therefore, choose the type of financing that meets your needs.
The financing arrangements offered on the market are:
- Direct Consumer Credit (CDC): Direct consumer credit is the most commonly used way in the financial market to buy financed automobiles. In this mode of personal financing, the contractor has immediate access to the car or vehicle purchased. The interest rates in Brazil for car purchases are very high when compared to other countries, eg United States, 3 to 4% per year, here is per month.
- Leasing: Leasing financing is another way of buying a car, however it works as if it were a lease of the vehicle. In the leasing contract the vehicle literally belongs to the lender, ie the contractor is not the legal owner of the vehicle. However, if the contractor wishes, he can keep the car at the end of the contract when the parcels are all removed. Interest rates are acceptable, given that when the contractor becomes debtor or defaulter, the creditor will have no difficulty in recovering the assigned car.
Using a credit card to finance a car
This operation is for little living, use a credit card to make the financing of all or part of the purchase value of a car or any vehicle. In this case it is like a cash purchase, but the buyer will pay for the car on the next invoice of the card which can be up to 40/45 days.
Another way is to use credit cards as extra protection if something goes wrong – you can currently pay consumer bills, taxes and financing cards, so if you need it you can also use the card to pay the installments of your credit car.
Financing a car with a payroll or personal loan
You can get a payroll loan from a bank, financial, credit union if you have access to this mode for borrowing money at low interest rates. You choose the payroll term within up to 6 or 8 years.
To carry out this transaction, make sure that the payday loan you are hiring has a lower interest than the one offered by the bank of the concessionaire or the bank of the assembler. Otherwise it will not be worth it.
As for the common personal loan, it is not feasible under any circumstances, the rates applied in general are greater than 5% and hardly a personal loan is approved and released with rates lower than that of a car financing or a payroll loan.
Compare interest rates on financing
To buy a vehicle, financing is the most practical, easy and quick way to get the desired good to buy. But on the other hand, as in any financial transaction that finances money with interest, in the financing may also have variations as the interest rates applied by each lender.
To stay calm and make sure you have made a right deal, it is important to make comparisons and seek more complete information about which lenders, banks and best lending companies to finance vehicles that are available, to then hire them.
What to know before requesting and financing a car
Interest Rates: The interest rate you will have on your financing depends on your credit score and the proven income, and also the length of the loan you choose in addition to the model of the vehicle.
Financing Deadline: Some lenders offer financing for up to 60 months, however it was up to 72, the term was reduced by banks this year. The belief that long term is better because the low portion no longer works, it is best to repay the car loan as soon as possible as the cars depreciate very quickly.
Applied Interest Rate: Comparing across multiple lenders you will more easily find a more competitive interest rate. However, this can have a side effect, you will be contacted by several lenders, or even resellers, when you primarily use online car financing comparators.
Financing: Once you have chosen the car, the lender bank and the financing mode, the lender will do all the checks to finalize the loan application and, having done all the seller / lender / buyer procedures, the dealer or store will arrange the deliver the car and vehicle documentation as soon as possible to the buyer.
Is pre-approved car loan important?
Pre-approval of financing a car financing is good because it streamlines the negotiation process and prevent the seller from using tactics and manipulation at the time of sale.
When you have pre-approved financing for car buying, you become practically a “buyer in sight”. That means you can focus more on negotiating the price of your new car, instead of juggling the finances with the seller.
When to refinance your car financing?
Here’s a situation that makes all sense to refinance your car loan:
Interest rates have dropped. Interest rates may fall for a variety of reasons: by the economic sector being in change, by increasing competition in the market, by regulators and many others.
If your finance interest rates are lower now than when you contracted the car loan, refinancing can help you pay off your financing earlier or save money on interest. Look for lender to know what the possibility of performing the refinancing of your car loan.