Friday, January 24, 2020

Auto credit: what are all the financing possibilities?

Auto credit is an essential consumer credit to finance the purchase of a car. It comes in different forms and evolves with LOA or LLD solutions. Our new or used car loan comparator provides an immediate assessment of your project.

Car credit: how to get the best rate?

You have to be on an objective comparator to hope to get the  best car loan rate .  In order to ensure that you get the best offer, the comparator must display:
  • the APR rate  : this is the legal rate incorporating all the potential costs of a credit, including any administrative fees. It must be communicated before the loan is taken out.
  • The classification of organizations  : beware of credit scams, you should only trust large organizations approved by the ACPR, the Prudential Control and Resolution Authority dependent on the Banque De France.
  • The acceptance rate : there is no point in rushing into a cheap car loan if it is so that your request is ultimately refused.

It is on this basis that we built our auto loan comparator It provides an objective ranking of the best rates, integrating only reliable and reputable online credit organizations (Cofidis, Sofinco, Cetelem, etc.). In order to avoid offers at promotional rates which lead to a lot of rejected applications, we have developed a system for calculating the chances of receiving a positive opinion.
Our credit questionnaire provides an immediate answer in principle from the cheapest organization . Thus, when the file does not go to the best rate, it will be possible to query the second best offer, then the third, with one click. So many chances to get a concrete online car loan offer to rely on.
Good to know: car credit is generally an all-vehicle loan, which can also be used as a motorcycle loan .

Get a new car loan

auto creditCar loans are less and less offered in dealerships. Indeed, it is long-term rental (LLD) and rental with option to purchase ( LOA ) which have been on the rise for a few years. So much so that it is felt enormously in the figures of the ASF, the Association of Financial Companies. They show that funding via LOA continues to increase, despite the many questions it raises (see our opinion on LOA ).
Indeed, the LOA and LDD legally allow not to communicate on the rate of the product . A fight with unequal weapons against car credit, which allows big brands to display examples of very commercial financing. Resellers also take advantage of this vagueness to sell assistance and guarantees in addition. Result, the average customer has the impression of having access to a beautiful car for only a few hundred euros per month, while he often pays thousands without even being aware of all the conditions of his loan. Even though renting is for the most part more expensive than a car loan , as we had shown in our “car loan: which is the cheapest” survey , customers seem to have rocked.

New car credit: what to remember

The auto new credit meets certain principles.
  • To obtain it, you will have to justify the purchase of the vehicle
  • It can be obtained in concession, in bank or from a credit organization
  • If the sale is not concluded, the credit will be canceled
  • Duration: 12 to 84 months
  • Amount: 500 to 50,000 euros (sometimes more)

Beware of overly commercial auto credit offers

There are two common practices in the small auto loan industry, which should be particularly wary of.

Promo rates too catchy

In general, we see advertisements with titles like "  auto credit from 0.90% ". This type of attachment is generally only valid for loans with a duration of 12 months. Repaying a new car loan over 12 months means paying back astronomical monthly payments. For example, for a car of € 10,000, it will be necessary to reimburse more than € 830 per month , which is far from being permitted for everyone. Brands use these flashy ads to attract customers to dealerships, where they won't have had time to compare the best rates before being inundated with other offers.

Auto loan 0%

The offer seems unbeatable read black on white, but it is only offered by dealers who bear the cost of credit. The law provides that any free credit is actually taken care of by the establishment offering the good or service. When the dealer makes this effort, he risks not doing more on the price of the car itself. However, the cost of credit for a new car of 10,000 euros over 4 years is around 5% of the price of the car, with the cheapest car loan. So don't neglect the negotiation on the price of the car or related costs (registration, entry into service, etc.) in the case of a 0% car loan.

Get a used car loan

Very focused on sales between individuals, used car credit has not been subject to LOA competition . The second-hand market has been largely boosted by sites such as Le bon coin and La Centrale. For these auto loans, there is no other option than to turn to financial organizations.

Used car loan: what to remember

  • No need for proof of purchase in most cases
  • It is very largely subscribed with credit organizations (and not in banks or concessions)
  • Duration: 12 to 72 months
  • Amount: 500 to 50,000 euros
To find a used car loan, most consumers turn to "conventional" credit agencies. Indeed , banks and dealers are very rarely competitive for this type of loan. Banks are actually not really specialized in consumer credit, they have a lot of trouble giving car credit without knowing the profile of the customer.
As for the used car loan in dealerships , it generally represents a means of operating used vehicles for customers on tight budgets. The offers are limited and very poorly suited. It should be noted that dealers are generally commissioned on the distribution of these credits (including for new cars). As a result, their rates can rarely compete with those of a credit agency.

Compare auto credit

You might as well not go all out to understand the value of going through a car loan simulation. Let us take the examples of the most representative car sales on credit.
Financing of the purchase of a new car for € 20,000 with a contribution of € 5,000 over a reimbursement period of 60 months. (nb: a credit without contribution is just as possible but generally the contribution is linked to the recovery or resale of the old vehicle). Or a new car loan of 15,000 euros over 60 months:

Car loan in concession or in bank

Apart from known credit organizations like Cetelem or Cofidis, it is possible to take out car loans in dealerships or in banks. However, if you want to perform a car loan simulation online, only conventional organizations offer it.

Is bank auto credit competitive?

Banks are not specialists in auto credit. It is for this reason that specialized companies have taken up this niche. The banks are struggling to understand the risk of the car loan , and more for clients they do not know.
In other words, if you have not been a customer of your bank for years and you are not a good customer (ie without incident and with savings) it will be very complicated to get a proposal interesting. And for a used car loan, it will be even more complicated to obtain anything interesting. This was one of our conclusions after studying the Crédit Agricole car loan .
However, if you are in a good situation, asking your banker to make a proposal can be interesting. We will see later how to negotiate with him.

Car loans under concession

The manufacturers systematically offer financing offers to sell more cars. The major car manufacturers even have their own financial subsidiaries such as Diac for Renault or PSA Finance France for Peugeot Citroën.
As we have already seen, for a second-hand car loan, dealership offers are generally of little interest. They are clearly more expensive than those found online. For the financing of new cars, manufacturers can sometimes offer attractive rates, particularly during promotional periods. So do not hesitate to compare their car loan with the best online loan, in order to have a basis for comparison.

How to negotiate your car loan?

We have developed a method to follow in order to obtain the best rate of auto credit. It is based on the observation that on average one out of two loans is refused . On the other hand, for a good negotiation of your car loan, you have to know what will happen to us if we "lose", and therefore build a strong negotiation position.
  1. Obtain the cheapest car credit on the web.
    Simply use our credit comparison tool. A simulation of his car loan allows you to obtain the best rate, among the largest credit organizations.
  2. Getting a first agreement in principle
    This is essential. There is no point in knowing who offers the best rate if it is to obtain a refusal. Our system proposes to obtain an agreement in principle without commitment adapted to each person's file.
  3. Receiving a Preliminary Credit Offer
    This is the centerpiece of negotiation. The advance credit offer is a formal offer from an organization to make a loan at the rate indicated. This offer is not binding on the customer until it is signed. We receive it by post and / or email with the system we have implemented.
  4. Make an appointment with the bank and the dealer Now
    is the time to ask him the best offer he can make for a car credit car dealerships near me
  5. Negotiate and get the best rate
    If banks and dealers cannot match the rate posted on the contract obtained online, it is probably already the best offer.