Auto Loan: pitfalls, features and recommendations

Every day the speed of life of mankind is steadily increasing. Accordingly, the mobility of each of us increases. Personal car has long ceased to be a luxury and is often a necessity. Here, however, not everyone can afford such a purchase. A good way out in this situation can be a car loan. The pits of this phenomenon have become the topic of our today's article.

A loan for the purchase of a personal "iron horse" is offered today by virtually every financial institution. But how can you be sure that you have issued the most profitable car loan? Pitfalls when you receive money or the machine itself can be hidden so skillfully that you can discover them only by commencing to fulfill the obligations you have undertaken. To avoid bondage, you need to carefully consider each stage of the design of the car.

Consultation

So, you decided to take a car loan. The pits for you have been prepared already at the time of the first consultation. In 90% of cases you will be offered to draw up a loan agreement for a so-called promotional car. And they will do everything very quickly and right in the salon. Thus, chasing after seeming cheapness, you have a chance to leave the dealer on that car, which was not even considered as a purchase.

Making an automobile loan in a bank, you will be spared from such imposition.

Signing of the contract

We continue to study the pitfalls of car loans. The next stage is the price of the car. The price often indicates the cost of the so-called basic equipment. Therefore, to begin with it is necessary to find out the full amount, taking into account the various "makeweights". This will be the real price, which you need to navigate. The cost of the car, indicated in the leaflet, in 99% of cases is not more than the advertising move.

To force a customer to buy a car more expensive, many managers argue that the availability of a package above the average is a requirement of a banking institution. Most often this is not true. Almost the only point on which employees of a financial institution can insist is an anti-theft alarm system.

And where to make out a car loan? Podvodnye stones can wait for you at every step. Therefore, before signing the contract, try to carefully study each of its letters. And do it best not at the place of registration, but at home, in a relaxed atmosphere. Ideally, you should involve a lawyer who understands such things. If everything is honest and transparent, then in the bank and in the showroom you will be given a copy of the model contract for detailed study without any questions. If such a request was refused, consider it! Probably, the creditor has something to hide. Is it worth making a car loan in a similar place? That's your business.

Options for loan proposals

And here are some more pitfalls of car loans. In car dealerships or in a bank it is better to arrange it?

On the one hand, when registering a loan agreement directly in the salon, you are limited to choosing a bank. You can get a loan only in the credit institution with which the dealer has a contract. It is by no means a fact that the proposed conditions will be the most profitable. On the other hand, the process will take much less time, and the documents will need a minimum.

At the same time making out a loan in a bank, you will choose from a standard package of services. And signing the contract directly in the showroom, you can count on any promotional offers. Dealers often develop such programs together with banks. So before signing the papers, it is better to calculate all the options.

"Interest-free" loan

So, you decided to issue a car loan. Underwater stones (which to fear) are hidden here very skilfully. Take, for example, a tempting interest rate of 0%. As you understand, the bank is not a charitable organization, which means it will not work without profit. Accordingly, there can be no interest-free loans. All allegedly not received by the financial institution profits have long been laid in various additional commissions, overestimated the original cost of the machine, the cost of processing documents.

Most often you need to run away from the "profitable interest-free loans" issued by car dealerships. On closer inspection, the conditions here are simply bonded:

• Term of crediting - no more than 12 months;
• Initial payment - not less than half of the cost of the car;
• Mandatory insurance in the place that the bank will indicate.

In addition, a wide variety of requirements can be added, which ultimately nullify all savings.

In order not to "get involved" in such a situation, ask the manager to step by step to paint on the leaflet all your actions on registration. At the same time, as accurately as possible, enter all the amounts of the cost of forms, permits, insurance, commissions for account maintenance and similar payments. Take a pause in a day or two and take an interest in similar offers from other banks. Perhaps your "interest-free" loan will not be so profitable.

Penalties

To avoid trouble in the future, try to immediately find out what penalties and what the bank can impose on you. It is not necessary to sign a contract providing for a huge penalty for every minute of delay in payment. Assess your financial strength really. It is also necessary to consider the probability that the financial flow of incoming funds may decrease. For example, you will lose the premium, or your beloved cat will fall ill. Or maybe the firm in which you work, and completely cease to exist. In this case, you will have to contact the bank about restructuring. Immediately ask if this is possible, and how exactly this process will pass.

Some banks impose a penalty for early repayment of the loan. After all, in this case they will lose less profit, which they counted on. Think about whether you are suitable for such conditions.

Sometimes, credit institutions impose fines for late notification of the change of personal data. This means that if you change your place of work, phone number or suddenly get married / divorced, then the bank should know about it. An untimely notification may result in the imposition of a fine, fines, and the bank's demand to immediately pay off the remaining amount of the debt.

Related costs

And where else can the pitfalls of a car loan hide? In an attempt to attract as many customers as possible, many financial institutions or car dealers to the last moment hide information about what other costs the client will incur. And they can be this:

• A fee for opening a bank account and maintaining it;
• Various insurance;
• Payment of credit amount conversion;
• Various fines;
• Bank commission for the transfer of funds to the auto show;
• Payment of bank services for registration and consideration of the application;
• Conducting a credit business.

Insurance

Have not you changed your mind about taking a car loan? Pitfalls await you and in part of car insurance.

First of all, be prepared for the fact that you can not apply to the UK of your choice. You will be obliged to cooperate with the company that has an agreement with a car dealership or a bank. In addition, the bank may claim not only to insure the car, but also other risks:

• Your life and health;
• Risk of non-return of the loan in case of loss of the source of income;
• Other risks.

Of course, you can refuse. But who will give a guarantee that you will get a loan in this case?

When registering insurance there are a few more nuances:

1. If you make out an ordinary CASCO policy, the insurance takes into account that the cost of the car decreases every year. Accordingly, the policy from year to year will be cheaper. In the case of a credit car, the amount of the insurance premium will remain unchanged for the entire term of the loan. That is, the car "grows old," and you will still pay as a new one.
2. Also in this case there is no chance to receive bonus malus. This is a discount that the UK provides for the break-even management of the car. Whatever your experience of driving you did not have, the cost of CASCO credit car is not affected. You will have to pay "in full".
3. In addition, if you apply for a car loan, you lose the opportunity to pay insurance premiums in installments. In this case, the entire amount will have to be put out right away.

Summarize

If you carefully read our article, you already know what pitfalls exist in the car loan. The only rule for those who do not want to get into a mess, there is one thing - do not rush. If you used to live without a car, then certainly you can hold out and a few more days. This time just enough to carefully (or better with a lawyer) to study the contract and read everything, even the smallest letters. In addition, you need to carefully recalculate all the figures and determine the amount, in which in the end you will cost the machine. Remember: if the euphoria of the upcoming purchase does not eclipse the eyes, no pitfalls to you are not terrible.