An example in this case would be the car loan, which is an advantageous banking product, and for many of us and the only (or the best way) to buy a car. It is good to be informed of all the advantages and disadvantages of the car market if you are preparing for a purchase for your garage.
What is a car loan?
Car loan is a suitable solution for various economic scenarios in which you find yourself. Maybe you haven’t been able to save money so far and put it aside in a bank deposit . Or maybe you don’t want to spend your savings on a car, but you want to invest them in something else. In this case, the car loan is your long-term purchase that you make using the help of the bank.
Specifically, the car loan is an amount of money that you receive from a bank or non-bank institution for the purchase of a new or used car, contributing an advance between 15-25% of the car price. The advance differs from bank to bank and also depends on the type of loan you make: car loan in lei or in foreign currency .
The lifetime of the car loan is between 6 months and 7 years, and up to a certain amount, its guarantee consists even in the purchased car. In other words, if you fail to pay the car loan, the bank will be able to recover the amount you owe by capitalizing. If you apply for a car loan for a large amount (eg 15,000 euros), as in the case of a mortgage loan , a mortgage on a property is also required.
Advantages for car credit
The main advantage of choosing a car loan is that it does not consume or block your savings in a purchased good. This way, you can continue to make plans with the money you put aside while paying the monthly rate for your new car.
Another advantage would be the promptness of the purchase. In the absence of current savings , the car loan helps you to buy a car without raising money for the mattress. There are certain events in our lives that hasten the purchase of a car: a new family member, moving to a home away from work or a new job.
There are non-banking institutions that accept car loans even to people with a negative history in the Credit Bureau . If you have already had an attempt to collaborate with the bank, which you have not been able to manage properly, the car loan gives you a second chance.
Another great advantage is that some institutions accept up to 2 co-borrowers and take into account all family income. So your chances have increased even more for getting a car loan.
Disadvantages for car credit
A main disadvantage of car credit is the mandatory Casco insurance . This conditions your credit approval and is a cost that you will have to bear. It will also be leased to the bank.
Car credit limits your choice of car a bit, especially if you opt for a used car. It must not be older than 5 years.
An extra effort for some is to collect the income in a bank account at the institution from which the car loan is requested. It doesn’t sound so bad, but it can be more disadvantageous for those who collect income in accounts opened with banks imposed by the company they work for. (You may incur the deposit fee each day of salary).
Another disadvantage is that for a used car the amount borrowed and the repayment period are shorter, precisely for the amortization of the guarantee.
The conditions differ from bank to bank, so it is best to study the market and the offers that all banking and non-banking institutions have and to choose what suits you best.