Finding a car loan at the best rate is crucial, especially when you know the differences in rates practiced between all players in the automobile market. We will clearly define what a car loan is and who is able to offer it, before turning to the question of its cost. We will then see how to move from the stage of applying for car credit to that of immediate positive opinion at the best rate.
What is a car loan?
Car credit is a type of consumer credit, just like a personal loan, revolving credit or even a work loan. The car loan has a particularity: It is generally necessary to provide a supporting document (order form) to obtain it. Let us first identify the different players capable of offering a cheap car loan. We will then see the classic pitfalls to avoid in order not to pay too much for your car loan.
Cheapest car loan = lowest APR rate
It is thanks to the fixed APR (annual effective annual rate) rate that we will differentiate an interesting car loan from one to avoid. This is the reference rate for consumer credit, the one used to calculate the real cost of a loan. The APR integrates:
- Interest Credit
- Application fees or any additional costs
When considering the same amount / repayment duration combination, the lowest APR rate always indicates the cheapest car loan. The APR rate is however absent on the LOA (rental with purchase option) and LLD (long-term rental) solutions. This is a certain form of injustice towards the consumer, since these formulas are also corresponding to consumer credit.
Who can offer a car loan?
Let’s list all the players capable of offering a car loan. We can then compare their offers on the basis of the APR rate, but also looking at the acceptance conditions.
Many specialist organizations offer car loan solutions, but not all of them have the best rates under their hood. Online car credit has many advantages:
- Case processing and immediate response in principle
- TAEG car loan rates more competitive than those of banks and dealers
- No booking fees in the vast majority of cases
Among the most widespread solutions online, we can cite the auto loan Bankate, Viloan or that of Zaloan. We will see later that the best credits for cars are often those of online organizations.
Dealers are in the best position to offer car credit. From there to saying that it is a cheap car loan, there is a step that we will not take. Without going so far as to say that online car credit is always more interesting than in dealerships, our different comparisons made over time go largely in this direction. There are also questions to be asked about the chances of receiving a favorable opinion. When a car loan request does not go through a concession, the local sales representatives will be able to find alternatives, such as a rental option with purchase option (LOA) or long-term rental (LLD). However, it is rarely a car loan at the best rate.
Banks and specialist insurers
Banks obviously offer auto credit solutions. However, several blocking points do not really encourage you to approach a bank to obtain a car loan. Banks generally only lend to their best customers, or those whose situation is very stable over time. You still have to go through the agency appointment stage to discuss a possible car loan. You should know that a bank will never grant a car loan without guarantees regarding the financial stability of its client. This implies a certain history. This is particularly why it is difficult to consider joining a new bank in order to obtain good car credit.
Some specialist sites in the resale of new or used vehicles occupy a small share of the market. They can, for example, be useful for buying a revised used vehicle, with the possibility of obtaining an order form. Be careful, however, to read the contracts carefully and take note of all the costs before signing.
Is it worth choosing an online car loan?
The online car loan allows above all to serenely compare – and at any time – the rates of the car loan. Our credit comparator gives access to the best APR rates, whether it is a new or used car loan request. Let us simulate a request for a new car loan up to $ 15,000 over 60 months, in order to realize the differences in rates between the best specialists. We included in our comparison a car loan offered by a bank, a specialist insurer, a dealer and a site specializing in resale (AramisAuto).
|Car loan simulation $ 15,000 over 60 months||Fixed APR rate||Monthly fees||Total cost of credit|
|N ° 1 of our comparator’s credit organization||3.10%||269.91 $||1194.60 $|
|N ° 2 of our comparator’s credit institution||3.30%||271.86 $||1311.60 $|
|Auto loan offer Caisse d’Épargne Ile de France||3.75%||274.15 $||1449.00 $$|
|Maïf auto loan offer||3.94%||279.89 $||1493.40 $|
|Renault offer (DIAC)||4.99%||283.00 $||1980,00 $|
|Aramisauto offer||5.97%||288.48 $||2308.80 $|
Credit agencies have the best APR rates, and this is not an isolated comparison. Comparing the best APR rates for car loans on our comparator also provides an immediate answer in principle. Connected to the main specialists, our tool makes it possible to avoid simulating a request several times on different sites, by risking missing out on the best rate.
You must select “New car loan (-2 years)” or “Used car loan (+2 years)” to access the best rates, but above all get a response at the best rate in five minutes. Now back to the difference between a new and used car loan.
Car loan for a new vehicle
Here, according to our experience, the best way to get a cheap car loan in the case of a new purchase:
- Estimate your need for money well and compare aut credit offers online, thanks to our credit comparator.
- The organizations offering the best car loan rate provide an immediate answer in principle.
- When the best specialist is unable to agree, it is possible to request the 2nd and 3rd with a single click.
- The contract obtained online serves as an excellent basis for comparison, before possibly contacting your bank or the dealer offering the car.
The used car loan
The used car loan can be obtained in two different ways:
- Thanks to the used car credit *, provided that the seller can provide an order form.
- By means of a personal loan without proof without order form.
Many used vehicles circulate between individuals, implying a sale without order form. In this case, you have to turn to a car loan without proof of use of funds. On our comparator, this credit corresponds to “personal loan”, “loan for all projects” or simple “need for money”. The rates for this no reason to buy loan are slightly higher than those for a new or used car loan.
The LOA, car loan solution to seize or flee?
Our opinion on LOA is very mixed, since the solution presents gray areas that can mislead the consumer. The rental with purchase option formula is very attractive for its “accessible” aspect, but what about its total cost? Where are its rates mentioned? Never actually displayed, the total cost of an LOA depends on the contract and the use of the vehicle. The seller actually rents a whole pack, generally including maintenance and an annual mileage package not to be exceeded.
The main question mark concerns the cost of a possible “maintenance ” package. Not always essential every year on a new vehicle, it can represent an expense that is both excessive and avoidable. The price of the car itself can also be questioned. Our comparisons have always placed classic car credit before the LOA in terms of total cost, including in the case of a resale of his car in order to settle the loan, and thus start again on a new model. It is always worth making the right calculations before signing an LOA offer. Finally, note that one does not become an owner during the term of the contract. It will therefore be necessary to return the vehicle in impeccable condition so as not to have a bad surprise when receiving the take-back offer.
Car loan: tips and pitfalls to avoid
Getting a cheap car loan does not mean avoiding some classic mistakes. Here are the three points to check when buying a new or used car on credit.
The presence of a mention “purchase on credit” on the order form
This mention protects you in the event of a problem if the car is not delivered, or if credit is ultimately not obtained. The car loan will be canceled in both cases. It should not be mentioned “cash purchase”, under penalty of seeing the amount of his deposit soar in the event of a change of mind.
Check the commissioning or registration fees
These costs are often excessive, since they are included in the total price. It is always worth asking for details of all the services, including the price of the car and its options, but also the costs of commissioning or registration. Getting a small discount on additional fees, or even the price of the car can make it possible to get a car loan with better conditions.
Do not pay for the entire vehicle before delivery
You should never pay for a car in full before you receive it. The deposit should never be too large, 10% representing a maximum level. Waiting until the vehicle is delivered before paying allows you to avoid an unpleasant surprise, such as damage during transport or a visual or technical defect.
Be aware of the legal withdrawal period
The withdrawal period for a new or used car loan is 14 days, as with any consumer loan (the law explained). It is therefore possible to cancel a car loan from the delivery date of the vehicle, by registered mail.