Car loan is like all consumer b long term commitment and burden of family budget. The car loan is aimed both at buying a used car and a brand new car. Before negotiating it is therefore good to compare more offers on the market and possibly think about another type of loan or lease.
Nowadays, banking and non-banking institutions offer car loans. Non-bank car loans should be used as a last resort. There are currently many car loan offers with many bonuses on the Czech market, such as free vehicle verification.
How to get a car loan
Everybody can not get a car loan, there are several conditions :
- minimum age 18
- provable income (whether employment or business)
- be creditworthy
- document personal documents and possibly other documents
People with a record in the debtors register or people in execution and insolvency cannot get a bank car loan. A car loan without a registry is not yet available.
Being creditworthy at the bank means the applicant is creditworthy. Banks often assess all the applicant’s income, expenses, marital status, other loans, as well as payment history and morale.
Advantages and disadvantages of car loans
Like any loan, a car loan has its advantages and disadvantages. The big advantage is that most banking institutions offer to arrange their car loans online and the conditions for applicants are clearly and transparently listed. Applicants are not surprised by the hidden fees or the confused car loan calculator.
Advantages of a car loan:
- flexible repayment
- quick and convenient negotiation and understanding
- the owner of the car immediately after purchase
- better than leasing from a car dealer
Disadvantages of car loan:
- full responsibility of the car owner (even for service)
- be a creditworthy client
- insurance must be purchased
- at the time of repayment of the original amount of the car loan with interest, the car will have a significantly lower price
Before signing it is necessary to make sure that monthly payments are not too much burden on the budget. It is also necessary to verify that the contract does not include any hidden fees associated with the loan and arbitration clauses in the case of non-banking companies.
Car loan, leasing or operating leasing?
In addition to cars on loan there is also the possibility of so-called car leasing. Leasing differs from a classic car loan in that the borrower does not immediately own the car. It becomes the owner only after full payment of the total amount. Its arrangement is usually simple and often comes with benefits (eg with accident insurance). On the other hand, sometimes leasing comes with a down payment, ie the need to pay a certain amount of the car price in advance.
Leasing applicants may also be required to conclude a contract. Another disadvantage is that if a leasing company crashes, the client’s leasing car will be confiscated to repay the debt.
Another option is the so-called operational leasing. Often, the terms leasing and operating leasing are used interchangeably. Operational leasing means that the car is only rented to the client at all times. The monthly payment is thus much lower. Deposit is usually 0%. The mileage limit is set by the client and the car is regularly checked by an authorized service center. If you exceed the mileage limit, you will incur significant charges.
Car loans, leasing and operational leasing are offers that should be considered before purchasing a vehicle. All offers are widely represented on the Czech market and the applicant can often expect solid negotiations.
Providers and comparison of car loans
The best way to get the best and the best car loan is to use the car loan calculator online, or look at individual company offers to get an overview of the company, company reviews and fee levels and APR.
Each bank offers a different amount of car loan, maximum maturity, interest rate and total APR (annual percentage rate of charge). Usually, the lower the APRC, the better the car loan. It is also necessary to ascertain the existence of early repayment, late payment and credit arrangement fees.
Some banks, on the other hand, also attract various bonuses, such as free vehicle verification using Autotracer (eg Equa bank car loan) or more advantageous car insurance.