Should you ask for a loan to buy a car? How to apply for a loan to buy a car? Buying a car is the dream of many, but often a need to move around given the latent and inefficient means of transport in many areas of our country. However, many are forced to use a loan to buy the car despite the fact that the dealerships propose financing.
Both the loans offered by the concessionaires and the bank loans must be evaluated in their entirety, taking into consideration advantages and disadvantages, interest rates, Tag and Taeg. In order to assess what the total cost will be including all the charges but also the individual monthly installments.
Buying cars, better financial or bank loan?
It is advisable to ask for a bank loan to buy a car or to use a dealership’s finances. We will sift through both alternatives:
Buying cars with financial
Should you buy a car with the dealership’s financial institution? Dealer proposals remain a valid payment system, granted with great ease and often very flexible formulas. You have the convenience of concluding everything on the spot, without having to go to your bank. The financial part of the concessionaire has become very useful in times of crisis, in which banks hardly offer loans and if they do, they also offer onerous conditions.
How does the financial dealership work? It is stipulated with a credit financial institution that belongs to the dealer’s automotive group, and generally provides these conditions:
- zero advance
- no maxi-final installment
- possibility of returning the vehicle after three years and refinancing a new vehicle or simply the amount left to pay
Buy a car with a bank loan
Should you buy cars with a bank loan? The Bank may present different interest rates. The bank loan is useful when the dealer offers a financial with fixed rates with little possibility to vary and a very high Taeg. Generally, bank loans are useful when buying used cars at authorized salons.
For new cars, on the other hand, dealers offer payment by installments , in order to allow the customer access to their financing plans. However, if you notice the total at the end of the fair, you will find that the car was paid more than due to the payment by installments. To convince you to choose the financial institution, the dealers also offer insurance packages, additional services, and so on. The cash payment to them is not worth as it is taxed more.
Different speech for used cars. The sums are obviously much lower and the customer can at this point decide to pay in a single payment to avoid running into the dealer’s rates. And thus cover the expense with a bank loan, which in some cases may be more advantageous.
Types of loans, personal loans and finalized loans
However, a distinction must be made between personal loans and purposeful loans . The latter are obtained in the stores of the goods that you intend to buy and are closely linked to the purchase you are making. So, they fit in the case of buying a car. Just because you don’t get a sum of money, but you pay the price of the good or service in installments.
The personal loan , on the other hand, is a loan with no use restrictions , paid in cash directly to the customer and repayable with a pre-established plan. Therefore, the loan is not aimed at a purchase of a particular asset or service, but it is paid a sum of money that can be spent as it sees fit. So not only buy a car, but also carry out work at home, take a trip, and so on.
Buy a car with a loan, watch out for the APR
The customer who decides to take out a loan to buy a car must be careful about the APR. The APR, including other costs such as study or opening commissions, calculates the real cost.
The lower the APR , the cheaper the financing is. For medium / small cars, the customer can spend up to 3 thousand USD more than just interest rates.
What is the APR? Acronym for global annual percentage rate (APR) is the interest rate indicator of a financing transaction such as a loan or installment purchase of goods or services. It is expressed as a percentage and indicates the actual cost of the loan and was introduced by the European Directive 90/88 / EEC.
It represents the actual cost of the transaction expressed as a percentage that the customer owes to the company that has provided the loan or the loan. The APR, therefore, contains both the interest rate in compound capitalization regime, and the incidental expenses of the practice (preliminary costs, stamp duties, etc.).
It was introduced into the Italian regulatory system, for the first time, by the resolution of the Interministerial Committee for Credit and Savings n. 10688 of 03/03/2003, art. 9 paragraph 2, which has delegated to the BankColy to identify the operations and services against which the index, “including the interests and charges that contribute to determining the actual cost of the transaction for the customer”, must be reported, as well as the formula to detect it. From 1 June 2011, the Taeg calculation also includes the expenses related to the current account support if required.
How is the APR calculated? Comes from the following summation:
TAN + preliminary investigation and documentation costs + management fees + stamps + taxes + current account charges
Then pay attention to the fact that you can include life insurance or payment protection that could considerably increase the cost.
Moreover, car buyers are unaware that the credit institutions of the manufacturers include other terms in their loan repayment fee. Consider the claims for fines.
Then look at the so-called “retention of title” , very common especially when you go to finance vehicles. In fact, if included in the contract, then it is not possible to subsequently sell the car, sell it or cancel the sale until the loan granted is completely repaid.
It is also necessary to know that the TAEG cannot exceed the “usury rate” , whose calculation method is established by law and is updated every 3 months by decree of the Ministry of the Economy based on the trend of market rates and published in the Gazzetta Official. The table of maximum rates must be shown in each office or branch open to the public of banks and non-bank financial intermediaries.
Loan to buy electric cars how it works
How does the loan to buy electric cars work? Few people know that the current legislation provides a special loan for those who want to buy electric cars, just to push this category of car. Consider the case of the Cooperative Credit Bank. The concessions reserved for those who buy an electric car, hybrid, natural gas or LPG provide a subsidized loan of up to 100%.
Buy a car, the sale of the fifth
For the purposes of a loan to buy a car, a salary or pension assignment can be useful. Obtainable from employees, public and private, both permanent and temporary, atypical and retired workers and repaid through the payment of monthly installments at a fixed rate.
The installments are withheld directly from the pay slip or from the pension slip up to a maximum of one fifth of the salary / pension, until the debt is exhausted. Hence the name “cession of the fifth”.
Buy cars by leasing
Leasing is another valid alternative to buying a car. And in general additional services are offered in addition to the purchase of the good or service: maintenance, insurance and so on. A sort of long-term rental, also for some time now open to individuals.
Loan to buy cars, help yourself with the web
Of course, the web can be a great ally for choosing the best type of loan. Just type in “online financing”, “online loans” or “financing comparison” on Google.
Buy cars by loan, watch out for TAN
In addition to the APR, look also at the TAN. Acronym of nominal annual rate is the percentage of annual interest applied to a loaned sum. However, given that it only indicates the percentage interest applied to the loaned amount, net of other expenses connected to the provision of credit (cost of opening the financial practice, etc.), it is an insignificant indication of the true cost of a loan. This is why the APR is given much more weight.
Buying a car with a loan, which means zero
What does zero rate mean when you buy a car by loan? The advertised “zero rate” refers to Tan, therefore it does not include ancillary and collection costs .
The “zero interest” loan is offered as an alternative to the discount on the list price (or with a lower discount) or, more often, it is combined with the subscription of a “theft & fire” policy for the duration of the same. This policy obviously has a cost to the customer.
Loan to buy cars, what is needed
What do I need to get a loan to buy a car? Typically, the guarantees for a car loan are the same as for a normal loan: the presence of a pay slip and not being considered bad debtors. There is practically never a request for a mortgage on material assets, at most a guarantor’s signature may be requested, but only in special cases such as very high figures or a recently started work situation.
How to buy a car without a paycheck
How does the loan to buy cars without payroll work ? Meanwhile, it must be said that we do not want to say without income, but only without pay. Consider the case of a professional or self-employed worker, who must present the tax return. In the event that an entry that does not derive from work, such as a lease or the maintenance of a former spouse, is used as a guarantee, it will be necessary to present the account statement of your current account.
Other alternatives in the absence of a pay slip are a mortgage on a property or a guarantor’s signature with a regular pay check.
That’s why we said that the wording “without payroll” should not be misleading. As the institution providing the loan will obviously always want a guarantee. Of course, having a pay slip, even of a good size (in terms of amount and employer, we think of public employees), always facilitates things.
Buying a car, the Altroconsumo inquiry
In August 2017, the Altroconsumo association published a survey carried out incognito in 61 dealerships in 10 cities: Bari, Bergamo, Bologna, Brescia, Genoa, Milan, Naples, Rome, Turin and Verona. Have verified, leaflets in hand, the promotion and the loan proposal advertised .
However, the first thing to pay attention to is the specific model indicated in the announcement. In fact, the advertised price must then be summed up with other costs, such as color variation and additional costs such as optional extras. For example, the dealerships now also charge you for the cigarette lighters and the spare wheel. Things we used to take for granted until a few years ago.
As for the color, the metallic one costs more, especially particular colors. While red is the only color given at zero cost by law (perhaps because it improves road attention).
The conclusions reached by Altroconsumo are disarming : considering that the installment payment is chosen by four out of five buyers, another aspect to consider is the finalized loan that is offered in the dealership. Since these are promotions closely linked to financing – Altroconsumo reports – the purchase in a single solution is discouraged with a higher price, especially if the loans from the car manufacturers are the same.
The explanations given about the loan were often confusing and superficial. Only in one of the 61 cases considered, the association has recovered the loan contract, while the “Secci” (the document that contains all the information relating to the offers on the specific financed car model) has not been delivered six times on 10.
Finally, concludes the association in defense of consumers, a demerit note concerns the combined sale of specific policies, sold by the same financial company. Although not one of the three dealerships is mandatory, it automatically enters the agreed installments.
In light of this investigation, the Ivass decided to intervene on insurance companies and on finance companies to request changes to the sales process and forms . Acronym of Insurance Supervision Institute, this is an independent administrative authority that exercises supervision over the Italian insurance market, to guarantee its stability and protect the consumer.
It was established by decree law 6 July 2012 n. 95, converted into law 7 August 2012 n. 135 (known as spending review) replacing the previous ISVAP. The law introduced a new governance formula, partially integrated with that of the BankColy, in order to ensure the full integration of insurance supervision activity with a close link with banking supervision.
IVASS is chaired by the general manager of the BankColy.
Buy a car, watch out for the most stolen
Apart from the conditions offered by dealerships and banks for loans in order to buy a car, you also need to keep an eye on which are the most stolen cars. Of course, just take the right countermeasures to combat theft: block shaft, satellite alarm, anti-robbery system, garage. However, these are also additional costs and are often not enough.
Here is the ranking of the most stolen cars 2018 compiled by the specialized website Driving:
10. Opel Corsa
The German car retains its tenth position in the most stolen cars in Italy. 542 units were taken away in the first half of 2017 against the 664 of the same period of the previous year. As a percentage it is 1.24% of the national total of stolen cars.
9. Renault Clio
The success of the Renault Clio in sales in Italy makes it very attractive even to thieves. Of this model 758 specimens disappeared against 813, equal to 1.73% of the total.
8. Smart Fortwo
The Smart Fortwo is appreciated by the customers who buy them but also by the criminals who steal them. 901 specimens stolen against 1.025, 2.06% of the total.
7. Fiat Uno
Even today, the Fiat Uno, although it has not been produced for about 20 years, still occupies the top positions among the thefts: 1,161 in the period considered, against 1,459 in the previous one. The national total is 2.65%.
6. Volkswagen Golf
The Volkswagen Golf is another car among the most desired, sold and stolen. 1,363 units against 1,453. As a percentage of the national total of stolen cars, it is 3.11%.
5. Ford Fiesta
The Ford Fiesta has been a very successful car for about 40 years. 1,627 units were stolen in the first half of 2017, compared with 1,531 in the respective semester 2016. This is 3.71% of the total.
4. Lancia Ypsilon
The car preferred by women. Of the Lancia Ypsilon 1,804 units have disappeared in the last survey, against the previous 2,048; is 4.11% of the total.
3. Fiat 500
The Fiat 500 was stable on the third step of the podium. 3,567 units were stolen against 3,635. The figure corresponds to 8.14% of the national total of stolen cars.
2. Fiat Punto
Heir to the One, he also followed in his footsteps. For twenty years it has been a successful car and is starting to retire. It holds second place among the most stolen cars: 3,675 units disappeared against 4,253, equal to 8.38%.
1. Fiat Panda
The Fiat Panda concludes the ranking, on the crest of the wave for forty years. So much to be the car preferred by the Lawyer Agnelli. But it is also preferred by thieves: in the first half of 1017, 4,649 units were stolen against 5,566. This is 10.6% of the national total. So a car stolen out of ten in Italy is a Panda.
Loan to buy cars, the cheapest 2018
Of course, the price also affects the choice of a car. Especially if we have to turn on a loan or ask for a loan. What are the cheapest 2018 cars? In this case, Automobili.it provides the ranking
Cheaper cars 2018
In this ranking, as you will easily notice, Dacia dominates:
- Dacia Sandero 0.9 TCe 12V 75 Cv from $ 7.450
- Dacia Logan MCV 1.0 SCe 12V 75 Cv from $ 8.700
- Suzuki Celerio 1.0 L 70 Hp from $ 8.990
- Ford Ka + 1.2 Ti-VCT from $ 9,750
- Dacia Dokker 1.6 8V 100 CV S&S from $ 9.900
2018 cheaper utilities
In this section, for the quality-price ratio, they are preferred:
- Fiat Punto
- Ford Fiesta
Cheaper electric car
For the final explosion of electric cars, it will take a few more years. Both for the still high cost of the batteries, and for the scarcity (indeed, we can speak of almost absence) of charging stations in the city and on the road networks. However, for those who want to try to drive one, we suggest:
- Renault Twizy, 6,900 USD. Although it is only 2 seats and also placed in single file
- Renault Zoe, $ 22,550, to which must be added the cost for the rental of batteries which varies from $ 80 to $ 204 depending on the mileage.
Cheaper diesel car
- Here to win is the Fiat Panda, as seen, the most stolen car. He manages to be a faithful companion in city life but, thanks to the Multijet engine, he does not hold back when it is necessary to grind kilometers on the highway.
- Alternatively there is the Cytroen C3, whose prices, compared to the Panda, are only 600 USD higher.
LPG car cheaper 2018
- Dacia Sandero, starting price of only 9,750 USD
- Opel Karl LPG, from $ 13,720
The cheapest 2018 sports car
We close the kermesse of the cheapest cars with the most sporting ones:
- Abarth 595, from 19.650 USD
- Toyota GT 86, from 31,800 USD