In this case, it is necessary to repay fixed monthly payments during a pre-defined legal period at the signing of the contract.
This is also the case for credit brokers who offer similar formulas and a few dealers. These borrowing opportunities are generally called Installment Loans or installment sales.
The conventional financing offers monthly installments, so no surprise!
But there is also another form of auto financing offered by some financial institutions and with some dealers called here the ” balloon contract.”
Here the difference is that the monthly payments will be lower than through the installment loan, but remember that in this case, you will have to pay a large sum at one time at the end of the contract!
This credit balloon can come in different forms, but the principle is the same, for individuals who wish to pay low monthly payments and who can repay a higher amount of maturity.
This is ideal if you want to buy a vehicle every 4 or 5 years and thus recover the residual value by selling the car.
Warning! Finally, even if you feel that you are paying less each month, the total amount to be repaid is often higher than with a conventional car loan (installment loan), and be sure to recover the residual value, you should not that it is in poor condition or that the chosen car does not lose too much value in the years that follow.
Dealers sometimes offer a meager rate: 0% — a price that they can offer thanks to what is reported to them the sale of the car. But as compensation, the dealer might not give you (extra) discount on the car, or you’ll have to settle for a lower price for taking back your old car.
A second-hand car under the age of 2 benefits from the new auto credit rate , which is good news, it means that your opportunity under 2 years also benefits from the best rates.
Do not exceed 1/3 of your income, this is the rule of thumb.
Sometimes it is better to borrow a little more than expected because the rate is often lower than the highest is the amount borrowed. Refer to our comparative tables.
Some banks allow you to borrow 10% more than the value of the vehicle so you can also finance the circulation tax for example.
Most banks allow to introduce your request via the internet, it is faster (to have your money) and it avoids you to move.