How to choose a car loan?

A car loan is often the only option when you dream about a new vehicle, but with scarce savings, we can’t afford it. Is it worth using this form of financing? How do you know which bank offers the best terms? What can help us when we want to take a car loan?

Not so long ago, most Poles could only dream of a new car straight from the salon. Today, the situation is completely different – more and more drivers are getting a new car, taking a loan for it. Every year, thanks to this method, Poles buy around 1/4 million cars. 

 Car loan – an alternative way of financing

 Car loan - an alternative way of financing

If you are among a huge group of people who need a new car, but are held back by a limited budget – you may want to consider getting a loan. Of course, you can do it by investing in a cheaper, older model or buying a car in the aftermarket. Unfortunately, we risk an avalanche of additional expenses for continuous repairs and new parts. We don’t really know what exactly we buy, and often it is a pig in a poke – especially when we decide on a second-hand car. 

Currently on the market there are several forms of alternative financing for the purchase of completely new cars – enough to mention leasing, a traditional cash loanor just a dedicated car loan. There is no doubt that the multitude of options significantly increases the chances of buying a new and covered by a car. Before you decide to buy a specific car, take a moment to familiarize yourself with the various financing methods. For starters – did you know that some of them are offered directly by dealers? 

Car loan – at the bank or at the dealer?

Car loan - at the bank or at the dealer?

At the bank, you can take a traditional cash loan or a specialized car loan. It differs in that you need to indicate the precise purpose for which you borrow funds, and even specify a specific model that the bank will most likely treat as a loan pledge. It may be that until the repayment, the financial institution will be the co-owner of your car. Sometimes the assignment of rights under the AC policy will serve as collateral.

Why does a car loan pay off?

Why does a car loan pay off?

The banks are then quite flexible when it comes to scheduling repayments, and also offer a fairly low interest rate. The second option is the aforementioned car loan straight from the dealer. Some car companies have their own financial institutions under their wing that deal with this. Such a loan is a very convenient option – dealers have their own agreements with financial institutions, and they offer very personalized credit terms. With minimal formalities and simplified procedures, you can buy the dream model or one of the proposals of your favorite brand. It is worth noting that some dealers also offer one-time loans without interest, which allow you to divide the price of the car into two equal parts. The biggest advantage of buying a car on a loan from a dealer is speeding up and significantly simplifying the whole process. So – a car loan at the bank or at the dealer’s? You must answer this question for yourself. It all depends on whether you care about speed or on more favorable conditions (usually the cheapest solution turns out to be a specialized loan in a bank).

What affects the cost of the car loan?

What affects the cost of the car loan?

There are many factors that have a significant impact on the amount of installments. The most important of these are the value of the vehicle, the interest rate on the loan, own contribution and financial capabilities of the borrower, as well as the agreed repayment period. At the same time, the amount of car loan is influenced by details such as the age of the car or any preparation fees, as you must remember that even the best loan is never free. The cost of credit is not only interest, but also insurance, commission, and sometimes other fees, including the mentioned preparation costs. If you want to make sure that you choose the best possible solution, you need to spend some time comparing offers. You will need to think about your own financial options, look at the offers of many banks and dealers and choose this one, that best suits your needs. To choose the most suitable car loan, you can use the services of financial advisors or several completely free and easily available tools.

How to choose the best car loan? These tools can help you

How to choose the best car loan? These tools can help you

You already know that you need to find the best offer – which is unfortunately easier to say and harder to do. Choosing the best loan is not so simple. If you have already made the final decision to buy the car, calculated the own contribution and determined what the maximum monthly installment can be, it’s time to take the next step. To know which bank to go to, it’s best to do research on the web. The internet is full of helpful tools available for free. The ones that you should look at first are:

  • car loan comparison websites – compare the offers of various banks and compare the specific conditions they propose,
  • car loan search engines – thanks to them you can find a loan that suits you by filtering suggestions according to selected parameters,
  • car loan rankings – ready, selected, ordered offers that will allow you to track the most-favorable options right now,
  • car loan calculators – they calculate the monthly installments of the loans you are interested in

The above tools will allow you to consciously choose places to which you will later go in person. Sitting in front of a computer, you can check the differences between individual offers and assess the total cost of the loan (and not just the interest rate usually advertised). Treat all search engines, comparison and rankings as a helpful source of information – but remember that before you make the final decision, you need to get information directly from the financial institution.

A car loan gives you the chance to buy your dream model – because the monthly costs are not so high, you can afford a number of elements that increase the comfort of using the car. When a limited budget ceases to play an overarching role, other issues such as the brand or the quality of the equipment come to the fore. It is certainly worth at least to consider such an option. 

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