Buying a car by borrowing money can be challenging, as time goes by. The high cost of living, but also the prospect of maintenance and other expenses related to vehicle use will certainly exacerbate the financial pressure on the household. Fortunately, it is quite possible to reduce debt as part of a car loan, by moving towards a low-cost contract. How to do this?
What is a cheap car credit?
It is indeed necessary to know some principles in this matter, to avoid regretting your choice. The cost of a car loan is indeed quite relative and varies from one bank to another. First, when we talk about borrowing, we cannot turn away from the notion of interest. This distinguishes between the nominal rate, which is only a simple starting point for the calculation, and the general annual effective interest rate (APR). It is based on the latter that the repayment of the loan will be calculated. The APR or APR must include the nominal rate and, secondarily, a good number of other costs (administrative costs, insurance, commissions, etc.).
All these “withdrawals”, which vary from one lender to another, make the difference between car credit offers. So, in short, if your car loan has a lower TEG than another, it is usually more interesting. But that’s not all. The duration of the credit also influences the level of the TEG: over a short period, it is less important, over a long period, the TEG is more expensive. Otherwise, the amount of the loan can also determine the amount of the interest rate.
Put all the chances on his side
With this information in hand, it would be easier to design a personalized credit plan that is in line with your capabilities and minimizes your financial constraints. For example, it goes without saying that having a personal contribution in addition to credit is an essential asset, knowing that it will allow you to sign a short-term contract and borrow less, to repay as little as possible. Secondly, given that the booming car credit market is highly competitive, nothing beats a comparison of offers.
Simulate your auto credit and compare
The main point of comparison for auto loans is therefore the GER, which includes all deductions. However, each lending institution has its own method of calculating interest rates, which means that they must be compared. But instead of going from one office to another to find out the different interest rates applied, it is now enough to create a simulation of your online loan contract, in order to obtain several proposals at the same time.
To do this, all you must do is go to a car credit comparison site, fill out a simulation request form and receive a list of quotes by email. This is usually done in less than 5 minutes. You can then take your time to compare everything and distinguish the cheapest car loan from all others.