Today, more and more car loan providers are offering their potential customers the opportunity to perform an online simulation. Such a simulation allows you to see in advance what the options are and what you should take into account when you take out a specific car loan. You will then not only know how much money you can borrow, but also under what conditions this will be.
The only thing you have to do when simulating a car loan is to enter the requested personal and financial data in a special tool on the website of the credit provider. Based on the data entered, there will then be a simulation of the loan that you want to take out. The most favorable loan (s) will eventually be visible on your screen. As a rule, you can also request a quote for this (car) loan and even immediately submit the loan application. In the latter case, you must of course send the necessary supporting documents so that the lender can check your creditworthiness and repayment capacity for the possible granting of the requested car loan.
What should I look out for when I buy a car?
First of all, you must ensure that you receive the Car-Pass from the seller. This document says a lot about the mileage history of a car, but there are also a number of points that deserve your attention when you buy a (second-hand) car. You can think of:
- Arrange for yourself an expert who can assess the car,
- Check for traces of damage, an accident or hidden defects such as rust spots, width differences of the seams and differences in the paint color. But also the correct closing of doors and windows and wear of the top layer of the pedals deserve all attention,
- Start the car with a cold engine to identify defects a way to identify engine or battery defects.
Furthermore, a short test drive will tell you a lot about the condition of the car you want to buy. Along the way you should be especially aware of strange noises, the sound of the engine regularly and the way you can switch to all gears. Furthermore, you must check that the road holding is correct and that the brakes and all lights, direction indicators, and windscreen wipers are functioning.
You will also need to check the papers that come with the car, such as
- a certificate with the test results,
- a Car-Pass with the kilometer history,
- a new registration certificate to put the car back on the road.
Such papers may not be older than two months. By further viewing the maintenance booklet, you immediately know whether all planned maintenance sessions are correct.
Why take out a car loan?
As soon as it is necessary to purchase a new or second-hand car, many people will immediately see the classic car loan. This car loan is basically a simple installment loan that gives someone the opportunity to borrow enough money to finance a car.
Borrowing money will never be done by a bank or any other lender. A certain guarantee must therefore always be given to the credit provider. When you take out a car loan, you will always have to accept that the financial institution that lends you the required money, if you no longer have the ability to meet your payment obligations and can therefore no longer repay the loan, has the right to reclaim the vehicle.
A car loan is a loan form that is geared entirely to someone who wants to finance a car through a loan. For example, by choosing a personal loan if you want to buy a car, you would be faced with considerably more borrowing costs. Although a personal loan does not require a guarantee or lien on the vehicle for which you have borrowed the money, it does not offer the lender enough security that the loan will be fully repaid. This risk will then be able to considerably increase the final borrowing costs. In the case of a car loan, the lender will be partly covered by the lien if the payment obligations are not met and is therefore more advantageous.
How much can I borrow for a car
Before you take out a car loan, you naturally want to know how much you can borrow. The sum of money that you can borrow depends on various factors. Of course, the amount of your fixed income will play an important role, but any other debts that you still have at that time, such as a mortgage or a personal loan. Furthermore, a lender will want to know if you want to buy a new or a second-hand car with the borrowed money. So it is quite difficult to give a precise answer to the question of how much money you can borrow to finance a car.
For example, the credit provider needs additional information about your personal situation, income, and expenses to determine how much money you could possibly make to finance a car. After all, it is of great importance for the loan provider that the amount of money borrowed has also been fully repaid after the term has expired. If it turns out that your repayment capacity is not sufficient, the requested car loan will not be provided to you. After all, the risk for the lender is then too great because there is insufficient assurance that you can actually meet your payment obligation. However, sometimes you get an offer for a lower loan. However, it may just as well happen that you cannot borrow money at all and therefore have to arrange money for the purchase of the car in a different way.
What should I look out for if I borrow money for a car?
Borrowing money is a matter where you have to use your mind well. After all, it is not something that you deal with every day, but it is something that can have a major impact on your life. This is no different for taking out a car loan and you will also have to realize what you are doing in this case.
For example, you will have to be realistic, and of course honest to yourself, if you want to take out a car loan. It is therefore better not to finance a car that will end up in the scrap yard before the loan expires. Paying off money for a car that you have already done for a long time is therefore very unwise.
Borrowing above your intended budget is not risk-free and not every car is worth it
You will also have to control yourself when it comes to certain temptations. Just think of that beautiful car that is just a bit more expensive than you initially had in mind. You must then ask yourself whether you want to incur the extra borrowing costs, with the possible risk that your loan may not be able to pay off properly. Borrowing above your intended budget is not risk-free and not every car is worth it. For that reason you will have to resist the nice talk of the car salesman and still opt for the cheaper one. After all, you have more certainty that you can continue to meet your payment obligations properly.
What types of car loans are there?
The most obvious loan if you want to finance a car is the classic car loan. This type of loan is entirely tailored to the people who take out such loans. Yet you can always choose from multiple loan forms if you want to buy a car.
- Classic car loan : with this loan, the financed car will serve as a guarantee or collateral. This means that the lender can reclaim the car if you are in default with the loan repayment. The repayment of this loan will take place monthly by the payment of a part in repayment and a part in interest payment.
- Personal loan : this is ultimately considerably more expensive than a traditional car loan. However, this loan does not require a lien or guarantee on the car financed with the loan. The lender will, however, increase borrowing costs to cover the risk incurred by lending /
- Repayment-free car loan : a loan form that is rarely offered by lenders. With this loan you actually only pay the interest payment and the loan sum will only be paid in one go when the term expires. The reason that almost no interest-only car loans are offered is that it is a fairly large loan and that it is not repaid during the term, the debt remains constant and the cost price will not fall, just like with a traditional car loan. The interest-only car loan will therefore become almost unaffordable in practice.
Can I borrow money from the car garage itself?
In certain cases, a garage where you want to buy a car will offer you to arrange the financing for you. So you can apply for a loan through this company, but whether you do it wisely is a completely different story. The garage always works with a credit provider that will also charge an interest rate on the loan that you take out to finance the vehicle.
By borrowing money in this way for the purchase of your car, however, the garage will offer you less discount on the purchase price of the vehicle. At the moment that you want to make use of this loan option, you usually miss out on an interesting purchase discount. If you want to make a good deal when purchasing a car then it is wiser to arrange a loan for financing the car on the most favorable terms. That way you can fully focus on negotiating the most favorable purchase price at the garage. For example, you can ask the garage for an extra discount on your dream car and thus achieve the maximum benefit.
What are the costs of a car loan?
The costs that will be associated with a car loan strongly depend on the credit provider with whom you will be doing business. Today, a large proportion of these costs are already included in the final loan, or the loan provider will not even take it into account. However, it is always wise to ask your lender about such costs when you apply for a car loan or when you perform a simulation for this loan. As a rule, the following costs can be charged when taking out a car loan.
- Formation costs : costs incurred at the opening of the car loan that are often added to the loan amount.
- Current costs : monthly costs that are charged for administrative work performed.
- Early redemption costs : costs that are calculated if you prematurely terminate the loan contract, and therefore pay off the remaining debt in advance. So you actually pay compensation for breach of contract. Before you proceed to early repayment, it is important to compare these costs with the benefits. Of course you have a loan less open this way that can sometimes provide you with less tax benefits.
- Costs for late payment : often different penalties are included in the loan contract with regard to late payment. For example, your car can be seized or reclaimed by the lender.
How do I find the most favorable car loan?
You can work in various ways to get the most favorable car loan. You can for example
- approach different lenders personally, for example by visiting the office and going through the possibilities,
- ask different lenders by telephone what the options are, or request a quote,
- even scrutinize the options on the website of different lenders and make a comparison,
- carry out a simulation for a car loan on the website of different credit providers and possibly apply directly for a quote or loan.
- search for the most favorable car loan on a comparison website and possibly immediately request a quote or loan.
The time you want to spend looking for a cheap car loan that best suits your personal and financial situation is therefore largely in your own hands. In all cases, however, you should not stare blindly at the first best offer financing a car. Making a good comparison can often save you a lot of borrowing costs and that is always a bonus.
How do I check the reliability of lenders?
If you want to take out a car loan, you should preferably do so with a lender that is known to be reliable and honest. To find out if this is the case with the provider of the, in your situation, most favorable car loan you can easily find out. All you have to do is enter the name of this car loan provider into an online search engine. You then look for reviews and customer reviews that relate to the car loan and / or the provider you had in mind.
After all, the provider of this car loan can always throw around nicer sales pitch than it turns out to be the case. In order to get an objective picture of the provider, and the products offered by it, reviews and customer assessment are therefore excellent to use. After all, this does not only read the positive experiences, but usually also draws attention to the minuses. The chance that you will engage an unreliable lender will thus be considerably reduced.
Alternatives for a car loan
To be able to finance a car, you can of course immediately decide to take out a car loan. However, there are also a number of alternatives to this loan, such as:
- finance the car with a credit card,
- take out a personal loan,
- take out a revolving credit,
- red at the bank,
- borrow money from family or friends,
These are, with the exception of the last two option, as a rule very expensive alternatives to a car loan and therefore not really to be experienced. Borrowing money from family or friends may be a lot cheaper, but it is often not desirable because you can put considerable pressure on the relationship with this person. Even if you have clearly written down all agreements and stick to them strictly, this can cause certain tensions.
Saving enough money together before you buy a car is actually the only option that will not give you any loan costs and / or loan stress. You will even receive a (small) reimbursement in the form of interest paid on your savings. To save money faster you can, among other things, adjust your spending pattern and purchasing behavior, for example by no longer buying branded products, going out less, cycling more and walking instead of traveling by car or public transport. Keeping track of your spending accurately also usually means that you spend less money.
Check at the CKP for a car loan
All loans and credits from a thousand euros and / or a minimum duration of three months are kept in a register at the CKP. In addition, the CKP has a register of borrowers who have built up a backlog in their payment, or who are even registered as defaulters. These registers are not freely accessible, but only for certain governmental and financial institutions that are legally authorized to do so. A review at the CKP, however, is always a time-consuming process that will usually take a few weeks.
Every lender, including the provider of your car loan, is required by law to perform a check at the CKP before a loan is granted to you. This check is not only a protection for the lender, but also for you as a borrower. Because if you build up too much debt, the chance of financial problems and default will increase considerably. After a check at the CKP, a lender may refuse you to provide a loan for financing a car. Sometimes, however, you can take out a smaller loan, but often taking out a loan is only possible once your outstanding debts have been (partially) repaid.
The repayment of a car loan?
In most cases, the repayment of a car loan will take place in so-called periodic installments. In practice, this means that you pay off part of the loan each month together with a certain interest payment. The interest payment is a percentage of the outstanding debt and will therefore decrease proportionately with the residual debt as the term progresses. The duration and the amount of the loan determine the amount of the monthly repayments.
Before you take out a car loan, it is always wise to see how long the repayment of this loan will take. For example, if you want to buy a car that is expected to end up on the lap before the end of the term, then you should better abandon the purchase or choose another form of financing. After all, it is not realistic to still have to pay off a loan for a car that you no longer own.
You also need to calculate your repayment capacity in advance by aligning all your monthly expenses with your monthly income. To be completely sure that you can pay off the car loan without any problems, you also have to build in a buffer of approximately 100 euros per month in case you have to deal with unforeseen financial setbacks. The amount that remains then can be considered as a periodic repayment for your car loan.
Non-compliance with payment obligations
The moment you have not calculated your repayment capacity, or have not calculated it correctly, you can end up in (financial) problems. You are short of money every month because your income is lower than your expenses. In that case, there is a good chance that you will no longer be able to pay back the loan or other payment obligations.
If you do not repay your car loan in accordance with the agreements made, the lender will initially send you payment reminders and reminders to move you to meet your payment obligations. However, you will often have to deal with extra costs, for example for the administrative work carried out to send you these messages.
The moment the lender still has not received repayment from you after some time, your file will be transferred to a bailiff. This bailiff will approach you again with the request to pay the outstanding debt, which has now been increased with the necessary bailiff costs. In the worst case, however, the bailiff will proceed to seize the vehicle that you have financed with the loan, or (part of) your income.