A car loan will allow you to become a car owner for a short time without having large savings available. Banks offer various loan programs, but they all imply additional costs and interest overpayment. Having studied the information where it is profitable to take a car loan, future motorists save their own money by getting comfortable repayment terms for the lender.
Features of car loans in Russia
Car loans have a clear purpose, which affects the procedure for loan approval and vehicle design.
A car loan differs from a classic consumer loan in several ways:
- Funds do not give cash, they are sent to the seller’s account (most programs involve buying a car through a car dealership).
- You must first make a down payment for purchased vehicles (you must have personal savings of 1/5 of the price).
- The bank will require registration as a pledge for the entire loan period.
- In addition to confirmation of solvency, the bank may need to present a driver’s license.
- A purchased car cannot be sold or disposed of by any other means, and the original of the main transport document, PTS, will be kept by the mortgagee, i.e. in a bank.
- Most financial institutions make voluntary comprehensive insurance claims, worrying about financial protection in the event of a car being damaged or killed during the repayment of a loan debt.
- The target program assumes involvement in the process of registration of three parties: the car dealership, the buyer and the bank.
The above options in car loans are quite common, but are not required. If you wish, you can find profitable car loans in banks under the following conditions:
- no down payment;
- without casco;
- without proof of income.
These varieties almost always entail an increase in interest rates due to an increased financial risk for the lender, which means that the total overpayment on such loans will be higher.
Nevertheless, within the framework of individual programs and promotions, motorists can be provided with particularly advantageous offers on auto loans with a simplified clearance scheme and a minimum rate.
Criteria for choosing a car loan
It is necessary to determine the key parameters of the future loan and the final goal: if a loan for a new car is easier to find, then when trying to get a car loan for a used car, difficulties may arise. It is important for the bank that the collateral object has high liquidity, so that in case of problems with debt repayment, the mortgagee can quickly and profitably sell the vehicle and close the credit line with the proceeds.
If you plan to take a loan for a used car, you need to be prepared for the fact that not every bank will agree to credit the purchase, therefore the list of available programs is significantly smaller.
In the process of studying where it is better to take a car loan, you need to pay attention to the following indicators:
- Percent value. The lower the rate, the less overpayment for using the loan.
- The amount of the first installment.
- Requirements for the car. At its discretion, the financial institution limits the choice: with mileage, new, domestic cars or foreign cars. The age of the car and its category matter.
- Package documentation. When issuing funds without confirming income, the bank will study the borrower’s credit file more closely, provide a smaller amount, reduce the loan duration, require an increase in the first installment share, or offer a higher rate.
- Insurance Terms Of the possible options may require registration not only OSAGO, but also comprehensive insurance, personal insurance. If a loan is issued for a long term, the cost of insurance can be quite significant.
In order to attract customers and increase the demand for credit services together with certain manufacturers or car dealers, banks can offer unique options for auto loans – with a low rate, a minimum of documents and other interesting conditions. This option is the best way in the short term and with the least effort to get the most favorable conditions.
In which bank is the most profitable car loan
Having studied the offers of banks and their requirements, the borrower determines the most suitable option. In 2018, programs to choose a future motorist are available in many large banks and special financial structures directly related to the automotive market.
Car loan clearance procedure
Depending on whether a car loan is issued through the salon or independently, in a bank branch, the standard scheme of actions will differ slightly. When contacting the salon through a package of documents is minimal, and in the paperwork help the staff of the seller.
In general, the prospective borrower goes through the following steps:
- Approval of the application for a program selected in advance in the bank (or sending a request through a car dealership).
- Preparation of the necessary list of documents for signing the contract of sale.
- Making a down payment and submitting to the bank confirming papers.
- Registration of insurance, mortgage security.
- Signing a loan agreement and transferring the remaining amount to the seller’s account.
- The vehicle is registered with the new owner, and the TCP is deposited with the bank.
An initial fee
When determining where to get a profitable car loan, you need to remember that the interest rate and the total overpayment depend on the size of the down payment, which the borrower is prepared to pay. Standard programs provide for the introduction of 20-30% of the cost of the purchased vehicle. If you can not use your own funds, you must be prepared for a higher rate and more stringent credit conditions.
Studying what is the most profitable car loan you can take on two documents, it should be borne in mind that the loan rate will be higher than in standard offers.
For registration of borrowed cars are prepared:
- Personal documents.
- Documentation on the purchased car.
- Contract of sale.
- Receipt of payment of the first installment.
- Insurance policy.
- Help confirming solvency.
On the one hand, the hull insurance issued for the entire term of the loan agreement significantly increases the total cost of purchasing a transport vehicle, on the other hand, the mortgagee will charge a higher loan rate for which the collateral is not secured.
Other disadvantages of non-casco programs include:
- The value of the first installment automatically increases to 40-50% of the total cost.
- Servicing the debt to the lender for several years, the borrower risks remaining without the car itself in the event of its theft or total loss.
- If a car is damaged in an accident due to his own fault, the borrower is forced to rebuild at his own expense, and in conditions where it is required to repay a debt to the bank every month, it is rather difficult to find additional funds.
Government subsidy program
If there is no decision in principle to take a profitable car loan for used cars, the borrower can evaluate the benefits of programs with government subsidies. The main limitation is the choice of brand and model of a passenger vehicle. In addition to the entire manufactured line there is an opportunity to buy one of the common foreign cars assembled in the territory of the Russian Federation.
You can get a loan from the state subsidy under the following conditions:
- The price of the vehicle is up to 1 million rubles.
- Release – not more than a year ago.
- No records of previous registration in the Russian Federation.
- A down payment from personal funds – from 20%.
- Loan duration – up to 36 months.
The essence of the action of state subsidies is the provision of partial compensation, which reduces the percentage overpayment by almost half. The calculation of the final rate depends largely on the initial rate of the bank and the value of the refinancing rate.
Distinguished in the nuances, car loans have their own characteristics in the procedure for processing and servicing the debt. Proper selection of loan terms will allow you to buy cars with minimal time and money.