The loan to buy a car, new or used, is a type of loan or loan purpose that is subject to a specific purchase. So there is some institution or merchant agreement and therefore the sum paid is not paid directly to the applicant.
This loan will be signed by car dealer, and is required if you want to make a purchase installment. With a fixed interest rate, and a predetermined amortization schedule at the inception of the Agreement by special contract countersigned by the parties. Usually, before repayment as an incentive to purchase is granted a period in which the rate should not still be paid. This is only a postponement, or of a marketing strategy designed to attract customers at a specific time that they cannot even buy a machine with an installment plan. This tool is called a grace period.
The operation of the funding concerns three actors. The car dealer, the purchaser thereof, a financial institution. To manage the whole thing is directly the dealer, who will be responsible for all legal, informational and financial. Will be through words, or body with financial credit to the buyer, and then the debtor is committed for a certain period, and for a specific figure to multiple deadlines. Once approved and granted the loan, the finance company will pay the dealer the car. In fact, it guarantees to the consumer, that this will have to repay the money borrowed or monthly in advance. The car dealer, for its part, will thus have secured the payment – to ensure it is because the financial – and even more you will pay a commission. Cost that falls naturally, automatically, on the consumer, which it identifies as operating costs and opening practice. The buyer reviews, for its part, with the contract undertakes to return the principal amount, interest rates accrued during time of funding awarded and therefore all operating expenses which must however be clear to the debtor since the inception of the contract.
In funding for the purchase of cars there are some limitations that concern the financed value, the maximum sum payable, the time limit for repayment. Usually the amount that is covered is at most 80% of the total value of the vehicle. This means, however, that there are limits on the amount financed. Relative, that is, how much is in fact the car. But this limit on it alongside an absolute, and that covers the maximum amount financed in relation to a car, which is equal to 30 000 €. This means that funding for the purchase of a car cannot exceed a maximum of € 25 000 and in exceptional cases.
The timing of reimbursement are considerably: from a minimum of 6 months to a maximum of 60 months, with rates that fluctuate so much, even several hundred euro depending on the size of the purchase, amount financed, and the time total depreciation.
Depending on these factors, obviously the cost of funding increases or decreases. The longer and less conspicuous are the rates, financing will be more expensive, will last less depreciation, and the higher the rate, will be less expensive than its total cost.
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