Car loans – a bank or other lending institution issues interest loan to an individual to purchase a vehicle. This popular form of consumer credit. Features:
- This target credit: the money can be spent only for the purchase of cars.
- This mortgage loan: the car remains pledged to the bank before the payment of the loan.
More often resorted to the classic car loans. Consider its scheme. Do you want to buy a car? You have not Money for a new “iron friend”. You go to a bank or a credit broker. Mortgage broker – commercial organization, which is the intermediary between the borrower and the lender (bank or car dealer). Assists in the design and approval of car loan.
Also, as the lenders can act dealers. They provide loans from its own resources or cooperate with the banks. You choose the bank (or a car dealer), study credit conditions. Determine fill out the questionnaire and collect documents. The bank should make sure that you can repay the loan (solvency), and you have no other debts (credit history). Within days, the bank thinks, give credit or not.
If the decision is positive, the bank and the borrower (now you) enter into a contract. It specifies the term, the interest, the first installment, the rights, duties and responsibilities of the parties.
You buy a car. Sometimes banks recommend a particular car dealer; sometimes build cooperation with the interior chosen by the customer. All efforts on car registration fall on your shoulders. In addition, most of the credit agreement provides coverage at the expense of the borrower. Moreover, not only CTP, and Hull.
You are a lucky motorist! The main thing – carefully to repay the debt and do not forget that you are even though the owner, but the car is pledged to the bank. You may not sell it, donate or exchange. Moreover, if you will come hard times and pay on the loan will be nothing, the bank (car dealer) will take your “swallow”.
Pros and cons of car loan
Car loans, as a financial instrument has its own advantages and disadvantages.
- You can have a car without capital. Buy a car for cash may be one, and save for a long time and does not always work.
- Big choice. You can buy what you like, not what the missing money.
- A variety of loan programs: you can choose the most advantageous for itself (with a minimum period or, for example, without a long registration).
- The complicated procedure registration. Strict requirements for the borrower.
- Rise in the cost of cars. We will have to pay interest + mandatory insurance.
- Car Pledge.
Check this video to find out more about car loans: