Most people who choose to buy a car make the conscious choice to apply for a car credit .
The conclusion of such a loan is interesting, not least because a car is labeled as ‘lost capital’. This means that by definition they always decrease in value, at least until the moment that they are labeled as old-timer or collectors item. Before going to the bank or another lender, it is important to take into account that different aspects influence the (maximum) height of your car loan. Learn about how the PurplePayday title loan process works.
1.) The purchase price of the vehicle in question
At first there is of course the cost price of the car you wish to purchase. A structural distinction is made between private individuals and companies. For private individuals, for example, they can borrow the full amount including VAT in almost all cases. With various lenders, it is even possible to opt for financing of 110 percent of the purchase price. In this way, the borrower has a little extra margin, so that he does not get into trouble right away in the event of a temporary dip in his or her financial situation.
For companies, the above is not relevant. They can usually borrow up to 100 percent of the purchase price and then still exclude VAT. This has everything to do with the fact that the borrower can recover the VAT amount via the VAT return. In principle, this does not immediately constitute a problem, although this does mean that the borrower must first advance the VAT. In particular when it comes to a new management car, this amount may well turn out to be quite high. For companies, this is certainly something to take into account.
2.) The repayment capacity that you have
A loan and more specifically the amount that you can pay monthly can only be as high as your actual repayment capacity. This is a very important, limiting factor. This is not the case in the least because it also takes into account any other payments or debts that already exist. In addition, the other fixed costs, such as the rent of your house as well as electricity, gas and water are included in the calculation. It is mainly the repayment capacity that ensures that many people can not buy their dream car until their great sadness.
3.) The duration of the credit agreement
You as a borrower determine the repayment term of your car loan in general terms. In practice it is true that the bank can impose certain limits. For example, there is the difference in the maximum repayment period between a new and a second-hand car. In the latter case, the age of the vehicle in particular is of decisive importance. The choice of the term of the credit agreement will in any case have an effect on various factors. It therefore not only exerts an influence on the monthly ‘financial margin’ that you have, it will also always have an impact on the cost of your financing. The longer the installment of your car runs, the lower the monthly amount owed, but the higher the costs will be at the end of the journey.
4.) The statutory maximum
In point 3 of this blog article we have already indicated, you as a borrower can not just freely determine which repayment period you use for your car loan. The bank, but also the law has a certain influence on this. From a legal point of view, various maximum repayment terms have been determined, namely:
- A credit amount of between € 2,700 and € 3,700 must be repaid within 30 months;
- A credit amount of between € 7,500 and € 10,000 must be repaid within 48 months;
- A credit amount of between 10,000 & 15,000 euros must be paid back within 60 months;
- A credit amount of between € 15,000 and € 20,000 must be repaid within 84 months;
In practice, it often happens that the bank uses a slightly more strict payment period. This especially in second-hand cars. After all, their value may already have fallen sharply after a few years, as a result of which they offer insufficient guarantees for any problems related to the repayment of the credit.
5.) Your own financial history
Finally, the provision of each loan now also looks at the personal, financial history. Not least at the bank in question. For example, did you sometimes have to deal with a red balance that you did not receive in time? Or were there problems with paying off a loan in the past? In that case, you can be assured that the bank will be much more cautious about awarding a new loan. This can ultimately significantly affect your financing options. The reverse is of course also applicable. Are you a loyal customer with your bank or other lender and have there never been payment problems? Then she will welcome you (back) with open arms!