don’t pay too high a monthly fee!
More than a luxury, the car is a means of transportation that facilitates the daily life of many users. Therefore, the car purchase project is one of the most important and must be considered. However, with inflation and the high cost of cars, it is becoming increasingly difficult to pay cash to get a new car. Fortunately, thanks to various financing solutions, it is possible to buy one while paying monthly fees. Are you considering a loan to buy a new or used car? Learn how not to pay too high a monthly payment.
Decide in advance which car you want to buy
Choosing the right car that you want to buy helps to avoid ending up with a vehicle that is beyond your means. It is very important to opt for a vehicle that not only meets your needs, but also fits your budget. In some cases, it is necessary tomake a personal contribution before benefiting from a loan for the purchase of your property. The more expensive the car, the higher the personal contribution.
Therefore, it is best to choose your car according to its practicality rather than focusing on the aesthetic aspect. For example, there is no point in investing in a big car if you live alone. On the contrary, you can bet on a big car if you have a big family or if you plan to expand it. If your expenses allow it, choose one already combining aesthetics and practicality. You also have a choice between a used vehicle and a new car. A new one costs more than a used one, but it is in better condition.
Find the best interest rate and the best monthly payment
For a loan intended for the purchase of a car, you should make sure that your financial institution offers you a good monthly payment and a good interest rate. The loan rate is usually calculated by the bank according to its commercial policy, your profile, file management fees, etc. To avoid situations of over-indebtedness, the financial authorities in France have implemented a simple rule that prevents any lender from borrowing more. 33% of its revenue.
However, it may happen that unexpected events put the financial health of the household at risk, leading to over-indebtedness. In this case, using repurchase credit is the most appropriate solution. A repurchase or credit consolidation is a financial transaction that consists of consolidate multiple payment loans (car loan, real estate, consumer loan) into one loan to have one monthly payment.
Repurchasing credit leads to a decrease in monthly payments and a reduction in the payment charge. As a lender, this is a solution that gives you more flexibility to pay off your debts. However, the cost and duration of this new single loan is higher. Choosing for getting credit is one of the best ways toavoid paying monthly fees too high after buying a car.
Compare different financing solutions for your car purchase
People looking to buy a car today have several options, including classic car credit. It consists of making the first contribution, then pay monthly rent for a certain duration. This is a cheaper option that still involves interest to be paid in addition. In addition to car credit, you can also opt for an LOA (Rental with Option to Purchase). With this financing solution, the buyer leases the car for a certain period of time by paying a fixed monthly rent.
At the end of the contract, he can decide to buy the car. To finance your car purchase, you can also opt for a Consumer credit or personal loan. This makes unallocated credit available to finance a variety of projects, including the purchase of a new or used car. For financing options that require a financial loan, it is important to consider the issue of monthly payments. Compare different offers to choose the lowest restriction for you.
Avoid unnecessary options and add-ons to avoid paying too high a monthly payment
Some lenders will add unnecessary and overpriced options to the contract. Although it is highly recommended, for example, you are not obliged to take out loan insurance when buying your car. It will be needed read the document carefully to identify anything you don’t need. Before committing, also make sure that additional costs such as administrative costs are not too high. Financial organizations sometimes offer attractive rates behind which are hidden significant additional costs. Take the time to make comparisons between different offers and evaluate the advantages of the contract.
Buy a car that you can afford to pay off every month
By properly assessing your borrowing capacity, your income, your fixed charges and what’s left to live on after paying your monthly payments, you’ll have an idea of the type of car you can buy without breaking the bank. Opt for a vehicle that you can easily pay off every month. Avoid cars that are too luxurious and impractical. Also avoid making a car loan without a contribution. Interest rates are actually higher when the lender requests credit without a personal contribution.
Banks consider this profile as a risky borrower. Lending without a personal contribution means that you are obliged to pay 100% of the value of the vehicle in addition to interest. After the calculation, the loan period is very long and the monthly payment is higher. In the long run, this can be very taxing from a financial perspective. The ideal is therefore to opt for a car loan with personal contribution It’s not rude to not keep your debts for a long time.