If car credit is an essential financing solution to buy the car you want, interest raises the bill. In what proportion? The interest rate of the car loan depends on the duration and the amount borrowed mainly. A summay is on rubendevela.com
AUTO CREDIT RATE: NOMINAL OR TEG RATE
With a car loan, the money loaned is intended only to finance the purchase of a car, whether it is a new or used vehicle. After choosing his future vehicle, the buyer must specify that he wants to finance the transaction with a car loan when signing the order form. This proof will be necessary to constitute the car loan file to be transmitted to the lending organization.
• the nominal rate of the car loan determines the amount of interest that the borrower will pay over the term of his loan;
• the Global Effective Rate takes into account, in addition to interest, the ancillary costs linked to the credit (administrative costs, insurance costs, guarantee costs).
The TEG allows you to know what your car loan costs as a whole. The dealer often offers auto credit to his customers when purchasing a vehicle. But the borrower, before committing, will have to check the TEG of his car loan. The administrative costs can, in this case, be significant. It is also strongly advised to make a comparison with other lending institutions.
AUTO CREDIT RATE: VARIATION CRITERIA
Auto credit is the most requested consumer credit. It is also the one that offers the most competitive interest rate, for example, compared to a personal loan or a mortgage. However, it depends on the repayment period and the amount borrowed.
If the borrower has a personal contribution, the rate of his car loan will be more attractive because the amount borrowed will be less, but the buyer can also finance his vehicle without contribution. There are two types of duration for auto credit:
• short terms (from 3 to 36 months), which guarantee the most competitive rates (generally less than 3.50%);
• long terms (from 48 months to 84 months), which increases the interest rate (up to more than 7%).
The larger the amount borrowed, the more the car loan rate is in a low range.