The car finance has always been the most prevalent form of consumer credit. Loans to buy this car for many years have become part of the culture of the buyer of automobiles, whether it's new or used car. In the years of economic boom, the ability to purchase in installments allowed many Italians to become owners of their first car.
Today, applying for a loan to buy this car is now an established practice and in this regard the offer in this area has developed more and more, until you have many financial products on the market to choose from. This choice, however, if one side has fostered competition and therefore the underwriting of loans more attractive to the buyer, on the other hand makes it very difficult to wade through dozens of offers, interest rates and various terms.
Before applying for a loan, whether it is intended for the purchase of a car or other property, you need to be very knowledgeable. This is why today the Internet comes to the rescue. Virtually all financial have a website through which you can request detailed quotes and read the terms and conditions of the loan.
For their part, the automakers, often offer very competitive financing to buyers of its cars. This is also why many brands have created their companies or other subsidiaries, which deal only to finance car purchases the parent company.
Requirements to apply for a loan
But what are the requirements to apply for a car loan? The requirement is no longer required to be an employee indefinitely. Even those without fixed employment may apply for funding if there is a person who vouches for him. In practice, if the debtor fails to pay the installments will be paid by those who guaranteed the payment. From time to time assess the financial and grant or reject the loan, based on an investigation which takes into account various parameters that will allow to establish the degree of reliability of a potential borrower.
The documentation required is generally the paycheck or the last tax return, which often must be associated with an insurance fire and theft as a further guarantee to the finance company, which in case of theft or destruction of the car, get a refund from part of the insurance company. Some financial institutions also require the signing of a bill, which guarantees in case of events, involving the debtor and render it unable to repay the loan, these conditions may be examples supervening death or unemployment.
The main influencing factors, however, the rate of repayment of the loan are: the amount financed, the term of the loan, which typically ranges from 24 to 48 to 60 months and the interest rate.
Types of Car Loan
Loan rate constants: this type of car loan provides for a fixed term, which typically ranges from 24 to 60 months, and the repayment of capital financed through monthly payments over time. Once you have paid all installments, the loan is paid off, then you do not have anything more to the Finance Company.
Car finance with small installments and the final installment maxi: With this type of loan you buy the car by paying an advance very low monthly installments and also a small amount, for a period that usually lasts two years. Once you have paid all installments mini you have two possibilities: the first is to pay a maxi final installment and pay off the debt, the second is used to return the car and evaluate it as an advance for the financing of a new car, continuing to pay the mini- rate for the same period, after which you will have the same conditions of repayment of debt.
Obviously it is highly advisable to always read any contract proposed by the finance companies. So looking to all terms of the contract, interest rate and especially the APR, we are talking about below.
What are the TAN and the APR?
The TAN is the annual rate, which in essence is the interest rate applied to a loan, but does not include the costs of opening practice, incidental charges, taxes, and capitalization. So, be careful because the rate is nominal and does not correspond exactly to the interest rate that will actually be applied to the loan.
The APR is the annual percentage rate and is practically the rate at which refer to know what will be the actual cost of the loan disbursed. The APR includes all expenses, from the opening practice to taxes.
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