Buying a car is a significant investment for many households and not everyone has enough savings to buy a car. Subscription of a car loan is therefore often a must. Here are some tips to help you select the right loan.
Questions to ask yourself before taking out a car loan
Choosing the right car credit is based on a series of criteria ranging from the price of the vehicle you want to buy to your income, to your repayment capacity taking into account the rest of your expenses constraints.
To subscribe the best auto credit, it is therefore necessary to ask you certain questions before starting:
- How much does the model that you plan to buy cost ?
- What is the maximum budget you can spend on this purchase? What is its weight in your budget?
- What is your debt capacity, knowing that the weight of monthly payments can not exceed 33% of your monthly income?
- How long are you willing to pay?
Auto credit: what are the different options?
For an individual, several types of auto credits are possible:
- personal credit. Classic credit, it is not necessarily linked to the purchase of a vehicle. Its amount and duration are freely agreed between the lender and the borrower
- the credit allocated. It is granted by a lending institution for the purchase of a specific property such as a car. Its value must be less than 75 000 euros and its duration greater than 3 months
- the balloon credit. Its operation is close to that of the lease with option to purchase or long-term lease
To know the monthly payments of your credit conso, you can realize a simulation thanks to our tool.
Compare different car loan offers
Before taking out a car loan, the different offers of the market should be put in competition. One of the most relevant and straightforward ways to simultaneously compare terms and rates is to use a credit comparator such as LesFurets.com.
When comparing, you will obviously pay particular attention to the total cost of credit (excluding insurance), but that’s not all! Also be very attentive:
- at the interest rate
- to the possible expenses of file
- the amount of monthly payments
- to the repayment term
- to the special conditions
A good knowledge of the law is necessary
Finally, it is also necessary to know your rights. Two major laws govern consumer credit :
- the 1978 Scrivener Act, reformed in 2010, governs the principle of consumer credit. It requires lending institutions to send a prior offer of credit to borrowers who take out a loan of less than 75,000 euros for a period of three months or more. This offer includes certain mandatory information such as the date, the financed property, the identity of the parties, the deposit, the loan amount, the terms of the contract… The borrower then has a period of 15 days minimum to think.
- the law focuses on over- indebtedness. It provides for the establishment of an over-indebtedness commission to find an amicable agreement between the borrower and the lender when the first one can no longer repay his credit.