Not everyone has so much money to buy a brand new car from the salon. Therefore, you have to buy a “slightly older car, but it is much cheaper.” In 2018 in Russia, for one sold new car there were three cars with mileage.
But it often happens that the funds are not enough even to purchase a used car. In order not to postpone the purchase for the future, you can use a car loan from one of the banks.
Terms of loans for the purchase of used cars
Loan products developed by Russian banks suggest issuing loans not only for the purchase of new cars at car dealerships, but also for the purchase of used cars from individuals. The buyer himself can find a car on the Internet or from friends. And if he does not have enough money to make a deal with the seller, contact the bank for a loan.
What are the conditions of such loan programs? Not to be unfounded, consider the features of the program called “Europe Bank”. Following the results of the first half of 2018, this financial institution entered the top 5 largest car lenders, issuing 12,910 loans . And if any conditions of this bank differ from the generally accepted ones, we will stipulate it separately.
What requirements must a borrower meet?
Car loan is one of the types of mortgage loan . The car purchased by the borrower is pledged from the bank until the loan is fully repaid. In case of problems with the repayment of the loan, the bank has the right to sell the car at auction and return its money. The presence of collateral reduces the risk of loan defaults, so banks to customers, car loans, make gentle demands .
A car enthusiast who wants to get a loan to buy a car from a private person must be a citizen of the Russian Federation and have a permanent registration.
The total length of service required to get a loan is minimal in this bank starting from 6 months.
The package of documents required for obtaining a loan:
- driver’s license;
- copy of employment record certified by the employer (for employees who work for hire).
If the loan amount is less than 2.5 million rubles, or if the down payment when buying a car exceeds 30% of its value, then an income certificate is not required. In other cases, the employee will need to provide a certificate in the form 2-NDFL, and the individual entrepreneur – a copy of the tax return for the last year.
Requirements for vehicles
Since the car bought by the borrower will be a collateral property and a means of securing the loan issued, the bank makes special demands on it. For example, Credit Europe Bank issues loans only for the purchase of foreign-made cars . Machines manufactured in Uzbekistan, Ukraine, Iran and (for some reason) in China he does not consider “foreign cars”. The age limit of the car – 5 years at the time of the loan.
Other Russian banks agree to give loans for the purchase of used cars of Russian origin (as a rule, not older than 5 years). The maximum age of credited foreign cars can reach 10 years.
Due to the fact that collateral loans are classified as loans with low risk, the rate on them is usually lower than on consumer loans without collateral. However, the cost of loans for the purchase of used cars is higher than when buying new cars in showrooms. Credit Europe Bank offers loans for used cars at a rate ranging from 10 to 16% per annum .
Possible period of auto-loan is from 2 to 7 years (standard terms of other banks are from 3 to 5 years).
The minimum down payment for future motorists is 10% of the value of the car (in most other lending institutions it is 20-25%).
Making Cisk when buying a car on credit is necessary. However, you can find banks that are ready to issue auto loans without buying a Cisk policy. However, in this case, the interest rate on the loan rises (on average, by 2-2.5%).
Pitfalls of buying a car with a mileage on credit
Let’s first call the benefits of purchasing a used car with borrowed funds. First, it is a financial gain . Every year a vehicle loses a part of its value, even if it is in perfect technical condition. And the buyer has the opportunity to find a car at a reasonable price.
Secondly, there is no need to wait several years until the money accumulates. After receiving the loan, you can drive the car on the same day.
But such transactions have their drawbacks . The most basic of them is a substantial overpayment for the goods . If you, for example, issue a loan in the amount of 500 thousand rubles for a period of 5 years at a rate of 15% per annum, then the total overpayment for the purchase of a car will be 214 thousand rubles.
A car purchased on credit is pledged to the bank . The owner of the vehicle will not be able to dispose of it at its own discretion (to sell or donate) until it fully returns the loan to the creditor.
When buying a used car is very high risk to purchase goods with hidden defects . A machine buyer can be a professional in his field (for example, a qualified programmer or advertising manager). But it is possible that he will be sold by a car expert who can disassemble an engine with his eyes closed. It is clear that the level of training of these people in terms of assessing the technical condition of the vehicle and identifying hidden defects is incomparable.
An experienced person will easily hold an inexpensive pre-sale preparation and hide the significant shortcomings of the car. And if the buyer fails to identify them before the transaction, then he will have to pay for the repair of the purchased car up to 30% of its value. An overpayment for auto repair will be added to the overpayment for the loan.
How to save money when buying a car with hands
How to avoid unnecessary financial expenses when buying a used car? The answer may seem paradoxical, but for this you need to pay for the services of specialists . Those people who buy used cars every day and arrange loans for them in various banks.
How can a professional help a car enthusiast when buying a used car? Let’s take a look at this using the example of the Auto For Lend service . Branches of this company (or similar ones) work in many cities of Russia (you can find information on how to contact service representatives here).
The process of buying a used car with the mediation of “Auto For Lend” in general terms looks like this:
- The client himself finds a car that suits him due to the technical condition and price.
- Fill out the form on the site service.
- Employees of the company agree with the buyer on the date and time of the meeting. The meeting is appointed on the territory of the dealership of the brand to which the purchased car belongs.
- On the appointed day, the specialists from the dealership service center check the car for hidden defects, legal purity and compliance with the stated market price.
- At the same time, the service employees apply for a car loan to those banks that cooperate with this dealer.
- If the application is approved, the buyer signs the loan agreement and transfers to the dealer the down payment amount (at least 20% of the car price). The final payment to the seller is made by the dealer.
- Right at the dealership, the seller and the buyer sign an agreement on the transaction. The buyer becomes the owner of the car (and the borrower of one of the banks).
Thus, intermediary organizations such as “Auto For Lend” are able to provide the customer who buys a car from his hands the same service as if he acquired a brand-new car in the cabin from an authorized dealer.
What is the savings for the client? Employees of the service center carefully check the incoming car for defects and issue a check list to the buyer with a list of faults and the cost of correcting them. The buyer receives irrefutable arguments for bargaining with the seller, and he has the opportunity to reduce the price of the car. In the course of further negotiations on the advisability of buying a discount from the seller can reach 100 thousand rubles .
Secondly, when self-processing of a car loan a person turns into 1-2 banks. And, as a rule, takes a loan where it is given. Service staff are credit brokers. They submit applications to all banks cooperating with the dealer. In case of receiving approval from different credit organizations, the client gets the opportunity to choose the most profitable loan option .
If you make a loan in the amount of 500 thousand rubles for a period of 5 years at a rate of 15% per annum, then the total overpayment will be 214 thousand rubles. But if you manage to take a car loan for the same amount and the same term, but at 10% per annum, the overpayment will be only 137 thousand rubles.
When buying a used car, trust the professionals.