For a brand new car, e.g. from the compact car segment, you have to pay – depending on the make and level of equipment – from approx. 70,000 to even 100,000 PLN. A used car from the same segment will be cheaper by up to tens of thousands of zlotys. We can finance the purchase of a used car in cash or credit.
Used car loan – step by step
Below we show what kind of loan we can finance the purchase of a used car, we will describe how – step by step – to apply for a loan and what to look for when choosing a bank that will provide us with financing.
Money for a car
We can finance the purchase of a used car with an overdraft limit or a cash loan. If there is such a possibility, it is worth considering it. However, the most preferred option is a car loan. In the banks offering these products we will find an interesting and extensive offer for financing the purchase of a used car.
Used car loan – loan offer
Before you decide on a loan, carefully check the offers available on the market. Internet financial comparison websites, car loan calculators, APRC, numerous car loan tips and – or maybe above all – current car loan rankings for new and used cars will help you with this.
We take a loan for a used car
When choosing a specific offer, let’s check the most important parameters of the loan we selected. To start with – is a down payment required. Banks do not always want to finance 100 percent. the value of the vehicle used. The second thing is insurance requirements – recalculate all insurances that the bank will require.
Is the car a loan collateral?
The most common car loan collateral is the transfer of ownership of the vehicle as collateral for the loan. In the case of this security, the bank becomes the owner of the vehicle, and the borrower can use the car free of charge within the limits specified in the transfer agreement until full repayment of the loan. The second collateral for the car loan is a registered pledge . The car to which the pledge relates is entered in the pledge register kept by the registry court. Information on the registered pledge is entered in the vehicle’s registration certificate. If the borrower defaults, the vehicle becomes the property of the bank.
The third solution is the vehicle card deposit – the vehicle card will be deposited with the bank throughout the entire loan period. As a result, you will not be able to sell the car being credited until you pay your debt. Banks still apply the assignment of the AC policy , i.e. the transfer of rights from the insurance contract to the bank. This means that if a car is stolen or damaged, the money from the policy will first go to the bank and will be used to pay our liability. Sometimes a third party surety may be required. It should be remembered that in the case of a used car, the bank may apply more restrictive forms of loan collateral.
Loan interest rate
More attention than the nominal interest rate (according to which interest is calculated) should be paid to the APRC, i.e. the actual interest rate on our loan, which includes not only interest, but also other costs related to the loan. The lower it is, the better. Note whether the bank has added insurance costs to the APRC (see: Car loan insurance and other costs). Also the commission for granting us a loan should be as low as possible – we can hit the promotion, where the commission will be 0 percent. It should also be remembered that the Consumer Credit Act (in force since December 18, 2011) abolished the maximum commission for granting a loan (it was 5%). Banks may charge a rate of several dozen percent. In the case of car loans, however, a commission of up to 5% is most often used.
Car loan insurance and other costs
If your used car loan is offered as part of a promotion, pay special attention to the bank’s requirements for additional insurance. It is possible that you will have to take out e.g. life or disability insurance, the costs of which will offset our profit from reduced promotional parameters. Other additional costs that we may encounter include the requirement to set up a personal account (account maintenance fees), a mandatory AC policy for the loan period (not required on a daily basis) or a preparation fee.
What else should you pay attention to?
Also check on what terms you can possibly use the so-called “Credit holidays”. It may be possible to suspend the repayment of part of the principal or interest installment of the loan. There is often the possibility of suspending one installment once a year.
Used car loan – take it or not?
Let’s not kid ourselves – a loan for a new car is more expensive than a loan for a used car. By deciding to buy a decent, used car, we are able to significantly reduce the amount of our loan. However, when deciding to buy a used vehicle, we must take into account the higher requirements, and thus – a higher price of credit from banks. Nevertheless, the differences between a loan for a new and used car are slowly blurring. However, please also note that some banks do not grant loans for cars older than 10 years, as well as for the fact that fees may increase with age and mileage.