1. Step one – money
We can rarely use a used car with an overdraft limit or a cash loan. Of course, if there is such a possibility, then it is worth considering it. Most often, however, we will have to use a car loan. And here we will come across an interesting and extensive offer for financing the purchase of a used car.
For example, from universal banks, the best offer is provided by Credithera, where we can get a loan for a used car, with an interest rate of 7.9% per annum, plus only 2% commission and 8 years of lending.
2. Step two – compare offers available on the market
Carefully check the offers available on the market before you decide on a bank loan. The financial comparison websites, car loan calculators, APRC, numerous car loan tips and – or perhaps above all – current car loan rankings for new and used cars will help you in this.
3. Step three – we take a loan
By choosing a specific offer, let’s check the most important parameters of the loan we choose. To start with – is a down payment required. Banks do not always want to finance 100% of the value of a used vehicle. The second thing is insurance requirements – recalculate all insurances that the bank will require. It may turn out that a profitable loan is actually a shell and the costs are simply spread elsewhere.
4. Step four – is the car a loan collateral?
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Most often, banks use vehicle ownership as collateral for a loan. As a result, the bank becomes the owner of the vehicle, which in a way lends you the vehicle for free until the loan is fully repaid. The second collateral used is a registered pledge – the bank can then guarantee itself a refund of the loan amount from the sale of the car if you do not pay your loan obligations.
The vehicle card deposit is exit number three – the bank will keep the vehicle card, so you will not be able to sell the car being credited. The banks are still assigning the AC policy. In such a situation, the bank will have funds from compensation in the event of a car crashing. Sometimes a third party surety will be required. It should be remembered that in the case of a used car, the bank may apply more restrictive forms of loan collateral.
5. Step five – interest rate and its components
We pay attention to the APRC – this is the actual interest rate on our loan. The lower the better. Note whether the bank has calculated insurance costs for the APRC (see step six). The commission on granting us a loan should also be as low as possible – we can often find a promotion where the commission will be 0%. The commission will be included in the loan installment, which will slightly increase it. The maximum commission is 5%.
6. Step six – what insurance do you have to take out and other additional costs?
If the car loan you have chosen is on sale, pay special attention to the bank’s requirements for additional insurance. It is possible that we 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 are e.g. the requirement to set up a personal account (account maintenance fees), compulsory AC policy for the loan period (not required on a daily basis), preparation fee.
7. Step seven – what else to pay attention to?
Check also how you can possibly do 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 credited vehicle, we have to 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 a certain number of years, as well as fees may increase with the age and mileage of the vehicle.