For reasons of safety and comfort or a simple desire for change, you have decided to buy a new car. As a financing solution, the auto loan seems to you the most adapted to your situation. But before taking the plunge, here’s a reminder about the selection criteria you must favor for this purchase.
What car credit for a new car?
Every year, 3 out of 5 new cars are bought by car loan in France. The statistics therefore confirm that this approach is well and truly anchored in consumer habits. Moreover, you have the choice between several financing solutions such as credit allocation, personal loan and lease with option to buy. To choose the offer that best suits your needs and your repayment capacity, learn to review your priorities and avoid taking a single criterion such as the interest rate applied.
To choose the right car credit for you, you must take stock of the period during which you intend to keep the car, how you will proceed for its maintenance, do you intend to become the owner.
Classic car credit
With the classic car loan, the repayment period is from 1 to 7 years and this loan will serve you for a very specific purpose: the purchase of a car with or without personal contribution. To better attract their customers, banks compete with tempting promotional offers, but you must be careful by favoring certain selection criteria such as the APR applied, the possibilities of delay in case of temporary financial difficulty and adjustable monthly payments. Also be aware that it will be easier for you to access a car credit for a new car, because its value is determined in advance, and this, with important guarantees that will serve to reassure the lending organization. What’s more, you will only have to pay the monthly payments once the car purchase has been completed. Otherwise, the credit is automatically canceled.
Auto loan in the form of unassigned personal loan
To buy your car, you can also opt for an unassigned personal loan as a car loan. This formula has the advantage of allowing you to spend money freely, without asking for proof of purchase.
The car credit subscribed with the car dealer
In some situations, you can access auto credit through your car dealer. The latter then plays the role of intermediary between you and a financial partner who will grant you the financing. In this case, you will quickly know if your car loan has been granted or not, while the applied rates are always higher compared to those offered by credit agencies and banks.
Lease with purchase option (LOA)
With lease purchase option, you rent a new car to a specialized agency or a dealer in the long term (between 2 to 6 years). This situation will suit you if you like to change cars every two years, without having to do the reselling. And if you decide to keep the vehicle, you can do it after the rental period by paying a residual value determined in the contract to settle the vehicle amount.
What new car to buy with a car loan?
Because the auto loan commits you to repay the borrowed capital over a predefined period, you must take into account important criteria to properly select the model of new car to buy. To begin, choose the model of car using your criteria of choice like the number of places which you will need, the distance that you will have to go during your displacements in city or your projects of voyage, the power of the car, the used fuel (gasoline, diesel, LPG or electricity), the brand that has always attracted you, etc.
To better reassure you, use the online comparators that will give you a ranking of cars according to their price, power and consumption. Moreover, do not forget to take into account the opinions of consumers to know the details of the daily use of cars that interest you. After the comparison, you will get quotes online.
With regard to the safety standards of your vehicle, the choice criteria taken into account by the bank that will grant you your car credit, refer to the results of the safety performance evaluations of cars sold in Europe. These crash tests are carried out by the Euro NCAP (European New Car Assessment Program), an independent body that performs checks based on the level of protection of adult users and children of the car, pedestrians, and assistance systems to the driver.
Where to buy the new car?
As soon as you have a clear idea of the car model you are going to buy with your car loan, ask your dealer who will guide you to the dealer nearest you. You can also rely on the agents who import new cars from other European countries and who take advantage of the destocking of dealers to be able to give you discounts that range from 5 to 20% compared to the price posted by manufacturers.
When you provide your purchase order with your credit application, make sure you specify the delivery times of the new car that may take several days or whole months depending on the model. And if ever the car is not delivered to you within 7 days of the delivery date indicated by the seller, you have the right to cancel the procedure via a registered letter with acknowledgment of receipt.
To reduce the amount of your car loan and the total cost of the loan, you can make sure to lower the cost of the car by buying it during the last week of the month to allow your seller to achieve his goals of sale, taking advantage of promotional offers and playing off the competition between brands and dealers.