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The car loan, to borrow to buy a car

Buying a new car? Or looking for a used car? Then chances are you also think of a car loan to pay for this. Saving is of course also an option, but it may be worthwhile to have your purchase financed and keep the amount in your savings account for something else. 

Borrowing for new car

Choosing the right form of financing is not always easy, because there are various options to consider. So you can always contact a lender to finance the purchase of your car . Usually it is also possible to finance 110% of the purchase price, but the offers of car dealers also create opportunities. They can offer the option to enter into financing for 0% which in some cases is a good option. Paying an advance will usually be mandatory in the latter case.

Comparing is the message . Always check out the different formulas with which you are eligible and compare the advantages and disadvantages of each other. Important questions that you can ask yourself can be:

  • Do I have enough savings to pay the advance?
  • Can I pay the car loan early without a penalty?
  • What are the conditions of financing at 0% and is it worth the effort? Are there no snakes attached to it (see further in the article)?
  • Which providers can I look at to compare interest rates?
  • Over what period will / can I pay off the financing?

Car financing: Types

Car financing: Types

There are various forms of car financing . Do not forget that you can also take out a loan from the bank or credit company to buy a car. An overview:

Sale on payment

With this formula you will usually pay an advance on the total amount of the loan. This form is usually slightly cheaper than with an installment loan, which means that this kind of car financing can often be considered.
The amount that you can borrow from this form of car financing will start in pricipe from 2,500 euros and a maximum of 50,000 euros. The term of repayments can fluctuate between 30 and 120 months.

Loan on installment.

Loan on installment.

An installment loan means that no advance payment will have to be made, as would be the case for an installment sale. Interest will also be due.
In most cases you can choose the term yourself, but try to keep it as short as possible to prevent you from continuing to make payments for a car that you no longer use. The repayment you will make (usually monthly) will consist of a capital part and an interest component.

Borrow at the bank

Taking out a loan or credit with the bank always remains a possibility. They will often offer an installment loan or, in exceptional cases, a different form of credit.

Credit provider in cooperation with the dealer.

Credit provider in cooperation with the dealer.

Some dealers or car brands work together with a lender. This can be useful because when you buy your car, you can also immediately fine-tune your financing.
Usually it will be mandatory to pay an advance first, in which case the remaining amount will then come under the funding. Do not forget to provide money so that you can pay this advance.

Car loan simulation

Many banks and lenders today offer a small tool on their website so you almost immediately have an idea of how much the final car loan will cost, how much will be paid back monthly, etc … So all the necessary information is immediately available to you a car loan simulation!

Costs for car loans

There are different formulas of car loans . To get an idea about the costs that can be charged, we give below a small overview.

  • Establishment: There may be costs associated with starting up your credit file.
  • Exit costs: If you want to repay your loan early, additional costs may be charged because it concerns ‘breach of contract’. In this case, you can check whether or not it is worthwhile to pay off the loan early.
  • Ongoing costs: These are costs (usually monthly) for administration of the file.
  • Late payments: if you can not repay your loan on time, you can count on additional interest. Do not forget that you can confiscate your car or take out a mortgage on your car.
  • Insurance: with some formulas an additional insurance can be taken out, this amount you pay in principle at the same time of the repayment.

Questions about car loans?

Forming car credits.

Forming car credits.

There are various credit formulas from which you can choose to finance your car. For example, we think of:

  • Credit on installment
  • Balloon credit
  • The credits at 0%

Which documents are required for a car loan?

You will always have to present some documents to the lender or bank so that they can confirm your identity and check your creditworthiness.

Some documents that you can ask for are the following:

  • Proof of identification: your identity card, a recent invoice for a utility, for example, to determine where you live, a driving license or student card.
  • Recording creditworthiness: An overview of the current loans, a recent wage slip, …

Those who are self-employed will not receive payrolls. This does not mean that the bank can check how much you can borrow, only other documents will be needed. As a self-employed person with a sole proprietorship, the bank can request your balance sheet of the past year and the current current year to assess how the income is evaluated. In addition, they will also be able to verify this by requesting a copy of the assessment notice of the personal taxes.

As a company manager you will receive a salary slip 281.20 every year, these are the wages you received from the company. This can serve to look into your pay situation. Do you want to buy the car in the name of the company? Then the bank will need a profit and loss account for the current year and the annual accounts for the past years.

Compare car loans: Calculate online

Always make the difference by comparing car loans or using special promotions. There are, among other things, the actions concerning the car show where you can respond to!

Interest rates are a snapshot. They are therefore purely informative and temporary, can undergo changes and / or be dependent on the loan amount.
Representative Example : Loan on payment of € 50,000.00; Term is 120 months . You pay € 516,02 monthly for a JKP of 4.50% . The total amount to be repaid is € 61,922.40. For an exact calculation, request an offer from the above parties.

What if I am refused for a car loan or car financing?

What if I am refused for a car loan or car financing?

A bank itself says little, there can be several reasons why this particular lender does not want to provide you with a loan. There is not necessarily a reason for panic, we give you some tips to get started:

What do banks check?
If you want to obtain a loan, you will try to calculate a maximum amount that you can borrow. It is always up to you to convince the bank that you can handle this financially. Go back a few steps and try to find a way so that you can find positive answers to the following questions:

  • Is your income high enough to repay the loan?
  • Do you have a good credit history with the lender?
  • Do you have a permanent job? If not: what is the reason that you do not have a permanent job or have worked for several employers in the short term?
  • What is your permanent residence and how much are your monthly expenses?

If you can provide an honest positive answer to all questions, then in principle there is no problem and you can try to contact another lender.

If multiple lenders refuse you, there are still a number of options to still obtain a loan.
The first is to work with a guarantee . Here you give your bank the car as a guarantee. This works without problems if you yourself have been able to finance the car for thirty percent or more via savings.
Convince your boss to give you a permanent contract . If that does not work, try to obtain a signed statement stating that if you continue to provide good work, you will get a permanent contract.
Borrowing a lower amount is also an option. Maybe you do not have the car you want to buy, but there are a lot of solid cars that you can buy at cheaper prices. At some point you will have to recognize that a car mainly serves to bring you to important locations such as your workshop.

Finally: Try it online.
Also try to contact some lenders online. In many cases you can submit your entire file online and you have the necessary money on your account within 48 hours. For example, you can already go to KBC, BNP Paribas Fortis or ING to obtain a car loan, but also at Cetelem .

What about theft or accident?

If you have an accident, or your car is stolen, you will have to take out a second car loan if you want to buy a new car. However, comprehensive insurance can provide for this. For example, an omnium insurance policy can insure damage or theft, so that you can be reimbursed under certain conditions. Also ask your lender: in some cases, theft insurance may be provided during the term of your loan.

Death during the repayment of the loan.

If you die and you still pay the car loan, your heir will also inherit your debts. They therefore pay the car loan further. A solution is to provide a death insurance that reimburses the balance of the car loan. Request a tailor-made calculation to find out the cost price.

I lose my job, what now?

A resignation can not always be predicted in advance. If you fear to lose your job and you want to protect yourself for that, you will have to look for insurance. In this way, the loan or credit of your car can be repaid (under certain conditions) up to 1 year after the job loss.

Car loan tips

If the purchase of your car is not an urgent matter: wait until the car show starts. There are various promotions that can ensure that the purchase of your car is much cheaper thanks to extra discounts, but also lenders go along with this and can provide extra cheaper loans.

Interest on your savings account today is no longer a problem, so try to save yourself to pay a decent advance on your new car. In this way you save interest that you would otherwise have to pay when paying off a loan. Try to arrange that you can spend at least 20% of the purchase price on the advance.

Keep to a feasible budget and avoid problems afterwards. Set a reasonable budget in advance by carefully monitoring your financial situation and determining what additional monthly expenses you can pay for the purchase of your car. Is the result less than expected? Then keep an option to buy a used car instead of a new car.

Limit the repayment term as far as possible. This is to avoid having to pay the car for 7 years, while you are already planning to drive the car for only 5 years. The shorter the loan, the less interest you will pay.

Always calculate the monthly burden to the total cost. 175 euros a month for a new car sounds very attractive, but if this runs for a period of 5 years, you will soon reach 10,500 euros. Do not forget this.

Cautions / Caution!

Car loans at 0%

Buying a new car and taking out a loan or credit to 0% sounds interesting and that is why it is the reason why many manufacturers offer this. But there are a few points that you should pay attention to to make sure that this formula is really interesting for you.

Providing a car loan to 0% sounds like it is of little benefit to the lender and / or the manufacturer, so they have to make sure that their profit margin remains profitable in some way and you have to pay attention to those tricks.

If you buy a new car, chances are you will receive a premium for your current car. The transferee who wants to purchase your car can give too low a price for this. That way, the manufacturer can still achieve a decent profit margin on sales, but that can be detrimental to your wallet. Please note that the purchase price is not too low.

Our tips:

Negotiate first about the purchase price of the car, do this at multiple dealers. If that does not work, check the conditions for car loans (whether or not at 0%), any premiums or discounts you receive and the purchase price for your current car. Do this at multiple dealers.

This gives you enough information to check whether the dealer where you want to buy your new car, has suggested a fair price for the purchase of your car. If that is not the case, you can confront him with this and try to obtain a better price.

Obligations and inclusion in the register.

A loan or loan at 0% will also be placed in the registers. This therefore does not differ from other loans or loans. Take this into account because it influences your borrowing capacity. It may therefore become more difficult to obtain a loan from the bank in the future, but that is the case with 0% for all car loans, and not just for car loans.

Do not forget that you have the obligation to pay the car loan within the foreseen period. If you do not do this, then one speaks of default and one can charge (expensive) default interest. Car loans at 0% therefore differ little from other financing when it comes to obligations. Be aware of any snags in the grass when purchasing your new car.

Refund time limit car financing.

Always make sure that the repayment term does not exceed the economic lifetime of the car. Avoid that you have to repay money on a car that you no longer use.

Creditworthiness

Find out how your current financial situation is. If necessary, provide an overview at your bank and see where you can optimize. Sometimes it can be rewarding to have credit revised. The banks will usually score on the basis of this creditworthiness, which in turn can lead to higher interest rates.

The creditworthiness is determined by various factors. In the first place there is the income. Strictly speaking, the bank will not be keen to lend your money, if 1 / 3rd of your income is already spent on other loans.
The bank also keeps a history from which they can determine whether you are a good customer or not. Repay loans in good time, an overview of your employers and your current loans are therefore no secret at your bank. It goes without saying that you have to prove that you have a permanent / stable job. A permanent contract is always a good signal to the bank, it will be more difficult if your interim contract has to work after an interim contract.

Do not forget the following:

Compare pays off! Always check the rates with several credit companies. On the basis of the information in this article you could already make your first comparisons. Do not always check the interest charged, but the APR (annual cost percentage) to decide whether a loan is cheap or not. Also make sure that the loan that you are accustomed to is sufficiently flexible so that you will not face any surprises. Prepare for the sausage, hope for the best.

Save a little in advance to be sure to pay the advance if necessary. The higher the advance paid, the lower the amount that you will need to borrow.
First make sure that you have permission from the bank to borrow a certain amount and then negotiate the purchase price of the car. In this way you are already running a lot in your search for a new car.
Also check out the possibilities of leasing a car. In some cases this can also be useful because there are no maintenance costs associated with leasing a car.

Compare all car loans in our database:

Compare below the details of all car loans we have in our database, request free quotes and choose the best car loan !

Interest rates are a snapshot. They are therefore purely informative and temporary, can undergo changes and / or be dependent on the loan amount.
Representative Example : Loan on payment of € 50,000.00; Term is 120 months . You pay € 516,02 monthly for a JKP of 4.50% . The total amount to be repaid is € 61,922.40. For an exact calculation, request an offer from the above parties.

Car insurance!

With a new car always hear a good car insurance. Here too you can benefit by comparing online. You can find more information at omniumverzekering.org or at auto insurance compilation.be about insurances.

Get started with car insurance immediately? Then we can recommend the following websites:

  • Touring : apply directly to Touring car insurance simulation;
  • Corona : request your quote from Corona.
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