In the previous topic, I talked about what it is, what are the main characteristic features of this form of bank lending, and now I want to dwell separately on all the pros and cons that it carries car loan. I will try to be as objective as possible and take into account all the important points, but if I forget something, please correct me. So, the main pros and cons of a car loan.

Pros of a car loan.

1. The opportunity to have a car without having money for it. Perhaps this is the most important advantage, which, in principle, banks focus on in their advertising campaigns. A person immediately receives all the benefits of using a car, paying its cost gradually over several years. In many cases, a person using a car loan does not buy the car for which he has enough money, but the one he wants.

2. Favorable lending conditions. In most cases, a car loan involves quite a lot, compared to many other bank programs. Interest rates on car loans are close to those on .

3. Simple registration procedure. Very often you can get a loan for a car directly at a car dealership: many banks practice such forms of cooperation. But even if you contact a bank, applying for a car loan in most cases will not take much time: the package of documents is minimal, and the borrower is verified using special scoring algorithms.

4. CASCO insurance protection. A car purchased on credit is insured against many risks under the motor insurance program in favor of the bank. Thus, if an insured event occurs that leads to the complete loss of the car, the insurance company will pay compensation, at the expense of which the loan will be repaid. Repairing minor and medium damage to the car will also be covered by insurance.

Disadvantages of a car loan.

1. Significant increase in car prices. If you repay a car loan according to the planned schedule, for example, over 5 years, then the increase in purchase price can be 50 percent or more without taking into account comprehensive insurance, and even more with it. At the same time, the car itself will become cheaper; even from the moment it leaves the dealership, its price will drop by 10 percent.

2. Additional burden on personal or family budget. Like any loan, a car loan is issued on a paid basis and involves regular payment of interest, commissions, and insurance payments. At the same time, the car itself requires additional expenses: fuel, garage/parking, washing, accessories and components, etc. Thus, when buying a car on credit, the total burden will increase very significantly.

3. Impossibility of selling a car until the loan is fully repaid. If a car owner wants to change his “iron horse” or sell it for some reason, he will not be able to do this in the usual way until he has fully paid off the car loan. But even if it is possible to persuade the buyer to deposit money in advance, and then wait until the bank removes the seizure from the car, he will still gain significantly less money than he spent (not only the reduction in price of the car itself due to wear and tear, but also additional payments will play a role , paid to the bank).

4. Mandatory comprehensive insurance. Not every motorist wants to insure his car under the motor insurance program, and in the case of a car loan, this will have to be done without fail. Moreover, the car will be insured in favor of the bank, and not the car owner, and even in the insurance company specified by the bank, and the conditions in it will not necessarily be favorable. The cost of comprehensive insurance reaches 10% or even more of the cost of the car, which is very significant.

Here, perhaps, are all the main pros and cons of car loans. Personally, in my opinion, the disadvantages are more significant. I would not buy a car on credit, and I do not recommend doing this, except for one case: when the car is necessary for business and with the help of it a person can earn more than he will pay the bank in interest and other payments.

A good alternative to a car loan is a competent one, which allows you to independently accumulate funds to buy a car and buy it at a profit for yourself, and not for the bank.

Stay tuned and improve your level of financial literacy. See you again!

Everyone, or at least a lot of people, want to have a car. This desire is spurred on by the neighbor’s purchase of a brand new foreign car. Seeing this makes me want to go to a car dealership. But there is nothing to do there without money. Where can I get them? Here the thought of a loan involuntarily comes to mind.

Of course, there is another option - to save money and fulfill your dream. But sometimes it is very difficult to save a large sum, and you want to buy the car you want as soon as possible.

If you already have a car in your garage, then there is always a reason to worry about purchasing a new high-status foreign car. The way out of this situation again lies in obtaining a loan. Now there are many loan offers on the market, here we will talk about car loans and consumer loans. Which one should you choose?

What is the difference

So, we have 2 options for a cash loan:

• car loan;
• consumer loan.

The differences between these loan products are quite significant. If you take out a car loan, then its purpose is precisely defined - to buy a car. You will not be able to buy anything else when receiving this loan - in this case, the funds are allocated specifically for the purchase of a car.

But if you take out a consumer loan, then with the money you receive you can buy not only an “iron horse,” but also a washing machine, a TV, and whatever your heart desires.

We have decided on the purpose, now it’s time to decide on the concept:

• Car loan is a cash loan issued to citizens to purchase a car. There is one very important feature here - the purchased car will be pledged to the creditor until the debtor is fully paid.
• Consumer loan implies the issuance of funds for the purchase of any useful item in the household. With this money you can buy the same car. In this case, the purchase will not have to be pledged to the bank.

Note! If it turns out that, having received a consumer loan, for some reason you cannot repay the debt to the bank, then bankers will not have the right to confiscate your vehicle for the purpose of its subsequent sale. But in the case of a car loan, everything is quite the opposite: if there are no payments, the bank will take the car from you and sell it to cover the costs associated with issuing funds to the debtor.

In order not to make a mistake and make a worthy choice, you need to be aware of issues related to the pros and cons of these types of lending. Only by analyzing the situation can you choose the ideal option. This is exactly what we will do now.

Car loan - advantages and disadvantages

This loan product is very popular today. But to get a car loan you need to have initial capital. Depending on the conditions of various banking organizations, you will have to initially pay up to 30% of the total amount.

Don't forget about the need to have funds for insurance - it will cost you about 10%.

Almost all car loan programs include car insurance. You shouldn’t be surprised by this, because in this case the car becomes a guarantor for repayment of the borrowed money. The vehicle will be pledged to the credit institution until full payment by the debtor. By the way, he (the debtor) will not be able to sell his car without the bank’s consent until the debt is paid in full. The car cannot only be sold, but also exchanged or given away.

Taking into account all the pros and cons of credit products, it will be easier to make a choice. When concluding a car loan agreement, you must take into account that the car should only be purchased at a car dealership.

In addition, the following requirements apply to a car with a car loan:

• the car being financed must be “younger” than 5 years old;
• acceptable technical condition;
• body geometry must be in accordance with the standard;
• import of foreign cars into the country must be carried out without violating the legislation of our country;
• The steering wheel must be on the left.

And now directly about the positive and negative sides of car loans.

pros

1. Interest on a car loan is several times lower than on a consumer loan.
2. You can get a car very quickly - often on the day of signing the loan agreement.
3. In this case, no types of collateral will be required, since the purchased car will be the guarantor of loan repayment.
4. You can participate in the trade-in program. It allows you to exchange your old car for a new one with an appropriate surcharge. In some cases, banking organizations provide additional bonuses in the form of interest reduction.
5. Many banks are quite tolerant of customers who have used car lending services and are tolerant of late payments.
6. This program provides various benefits. Discounts can reach 10%. Part of the losses of banking organizations is borne by the state.
7. Car sellers offer significant discounts to buyers who purchase a car with a car loan.
8. There are a lot of car loan programs, and car dealerships, as a rule, provide the opportunity to choose.
9. But the main advantage is the speed with which you can buy a car. Everything happens without unnecessary running around and standing in lines.

Minuses

1. You have to make a down payment. You won’t be able to do without it, since almost all banking organizations require you to deposit a certain amount initially.
2. Your car will be held as collateral by the credit institution until the loan amount is paid in full. If the debtor does not make payments, then the bank has the right, by a court decision, to take the car for debts.
3. The car must be insured with CASCO. But the costs of this insurance are quite significant, they can reach up to 10% of the cost of the vehicle. And if the car you buy is expensive, then the amount of overpayment will be quite significant. Car dealerships may offer a loan for insurance, but the interest on this loan will be much higher than the interest rate on a car loan.
4. Sometimes, with a car loan you can only buy a certain model of car. And it’s not at all a fact that the car you would like to buy will be on this list.
5. It is not profitable to repay this type of loan ahead of schedule. The fact is that banks in this case provide a certain commission.

Consumer credit - pros and cons

Such loans are issued by banks and other financial institutions for the purchase of a wide variety of goods. Usually the amount issued does not exceed 1 million rubles. Such a loan can be issued for the purchase of a specific item, in which case it becomes targeted. But non-targeted loans are also practiced - when using them, the debtor, when drawing up documents, is not obliged to indicate for what purposes he needs the funds.

These types of loans are issued to employed citizens over 18 years of age who have worked in their last place of employment for at least six months.

Here are the documents you will need when applying for a consumer loan:

• a copy of the work book;
• passport;
• 2-NDFL;
• military ID.

If the debtor takes an amount not exceeding 400,000 rubles, then it is quite possible to get by with only a set of these documents. If a significantly larger amount is required, then banking organizations may require the provision of collateral or a guarantor, and the list of required documents in this case will be much longer. If the credit institution makes a positive decision regarding the client, the debtor will be able to receive the money in cash at the bank’s office. Money can be transferred to his account in any bank or to a card.

Advantages of a consumer loan

1. The consumer has the right to purchase any car - it can be brand new or used.
2. You can buy a car from a private owner, and in this case trade is appropriate, and you can buy a car cheaper.
3. The cost of buying a car is significantly reduced, since there is no need to take out insurance.
4. The car will not be pledged to the lender. You can dispose of the vehicle at your own discretion - the bank will not take it away from you.
5. The car can be sold or donated.
6. There are no fees for early loan repayment. This means that you will be able to repay the loan ahead of schedule if the opportunity arises, and you will not incur additional expenses.

Flaws

1. Interest rates are higher for car loans. The overpayment can be quite significant.
2. Cars are expensive, so it takes a lot of money to buy them. However, our banks are in no hurry to provide significant amounts of consumer lending. There is also a high chance of getting rejected. The risk group includes citizens with low wages and those who have made late payments in the past.
3. The big disadvantage is the need for guarantors. Of course, you can do without collateral, but the interest in this case will be higher.
4. Getting a consumer loan is quite difficult - it will take a lot of time to process it.

Which type of loan is more profitable?

It is impossible to answer this question unequivocally - in some cases a car loan may be more profitable, in others it is preferable to take out a consumer loan.

Let's consider several situations and discuss some nuances:

• Let's say you've collected almost all the money you need to buy your dream, and you're missing a small amount. In this case, it is preferable to take out a consumer loan, because you really don’t want to pledge the car to the bank when almost all the money has been collected to purchase it. If you don’t have enough money, it’s better to use a car loan.
• If you feel that your financial situation is unstable and you could lose your job at any time, it is also better to get a personal loan. In this case, you can easily sell the car, which cannot be done when choosing a car loan, when the bank will sell the car. As a rule, banks sell cars at a price significantly lower than the market price.
• If you do not expect to own the car for a long time and think that you will sell it before repaying the loan, it is wiser to take out a consumer loan, because with a car loan the car remains pledged to the lender.
• If you qualify for the state car loan program, it is better to take out a car loan. This way you will get a very good discount. In addition, you can count on the government to pay off part of your debt.
• If your financial situation is stable, if you have chosen an expensive car, then take out a car loan. Statistics say that owners of expensive cars still apply for CASCO insurance.

Of course, the above cannot be called an axiom. We can only advise you to contact several shops and banks to clarify their credit conditions. Compare not only overpayments, but also the entire cost of the loan. Options with low interest rates, as a rule, are fraught with pitfalls in the form of extra costs for opening an account, etc.

The pros and cons of buying a new car on credit is a very important topic for the future buyer. There is a major deal coming up, which will have to be paid off over the next few years., therefore, it is worth extremely seriously assessing your financial capabilities and prospects for the future. Car loans are offered by dozens of banks, so their conditions vary, but in general, such programs have long been identified as a separate type of loans. What are the pros and cons of buying a car on credit?

Features of car lending as a banking service

A car loan is a targeted consumer loan that is issued for the purchase of a new or used car in a dealership or from private sellers. It may be offered at a bank or car dealership that maintains a partnership with a lending institution.

To receive such a loan, the client must pay part of the amount for the car and confirm his solvency to the bank. How profitable would such a deal be? The main pros and cons of a new car on credit:

• All the pros and cons of buying a new car on credit are covered by the opportunity not to wait many months until the amount needed to receive a loan accumulates, but to immediately go and buy the car you like. Banks help save a lot of time, and for many families, car loans remain the only option for purchasing a new car. Even a down payment today is not mandatory: a number of banks are ready to provide loans without an advance payment.

• Important pros and cons of a car loan relate to interest rates: this type of lending refers to secured loans, since the purchased car turns into collateral. Because of this, car loan rates are lower than for regular consumer programs: for example, at Sberbank, car loans can be issued at 13.5%, and consumer loans at 18%. In commercial banks, this gap may be larger.

On the other hand, this partly reduces the owner’s freedom: until the end of the payment period, the car cannot be resold or exchanged; the title must remain in storage at the bank. Some organizations require compliance with service rules; CASCO insurance is required almost everywhere. The pros and cons of buying a new car in this case compensate for each other, and the owner still faces additional costs.

• Important pros and cons of buying a new car on credit relate to the loan process itself. To receive a large sum to purchase a car, the borrower will have to collect income certificates and documents confirming registration and employment. The more documents confirming your trustworthiness you can submit, the greater the likelihood of receiving a positive answer. This is not very convenient for the borrower, but compliance with all requirements leads to lower rates.
• The pros and cons of buying a car on credit also relate to the terms of the loan. Most often, a car loan is a long-term loan, for example, in Sberbank the amount is provided for 5 years, and in VTB24 - for 6. On the one hand, this is an opportunity to reduce the monthly payment and make the loan more accessible to clients, on the other hand, obtaining a long-term loan leads to significant overpayment. True, due to the long period, it may seem unnoticeable, because the money will have to be spent gradually.
• A car loan for used cars, the pros and cons of which can take a long time to list, also has its own characteristics. The age of cars is limited: even foreign cars should not be older than 10 years, and for domestic cars the period is even shorter. It is recommended to buy them only in showrooms; most banks do not allow lending for transactions with private sellers. A used car has to be insured under CASCO insurance, which also leads to significant expenses.

Thus, if you consider a car loan from all sides, you can find very significant pros and cons. However, the large number of issued loans of this type suggests that such loan programs work quite effectively and are in demand.

Buying a car on credit has its pros and cons, but in any case it remains an effective tool for financial assistance. Until recently, Russia even had a program of preferential car loans, which was additionally financed by the state.

Different types of car loans: advantages and disadvantages

Today there are several options for purchasing a car on credit: the pros and cons of specific programs can be assessed directly at banks and car dealerships. Borrowers are offered the following options:

1. Express car loan: pros and cons are based on the fact that you do not need to submit documents on solvency, and the application is processed very quickly. The main disadvantage is the high interest rate, but such loans can save the borrower’s time.
2. Loans without a down payment are another opportunity to buy a car on credit: the borrower can evaluate the pros and cons himself. There is no need to save money before going to the salon; you can get by with minimal one-time expenses. However, in return you will have to pay more interest, and the loan term may be shortened.
3. There is also a riskier solution - a loan without CASCO insurance. The car is also collateral, but the borrower bears full responsibility for it in the event of an accident. If the car gets into an accident due to the fault of the driver, you will have to repair it at your own expense and continue to repay the loan; in addition, the bank may require you to pay off the loan ahead of schedule.

Is it worth buying a car on credit? The borrower should evaluate the pros and cons of such a decision long before going to the bank. Only after this can you evaluate the conditions offered under credit programs and submit applications for loans. Choosing the right loan will allow you to pay it off quickly and without problems, receiving full ownership of a new car.

A car loan at a car dealership is, for many, the solution to buying a car. However, it very often turns out that despite the convenience of this operation, in the end it turns out that the cost of the car is almost two times lower than the cost that you will pay in the case of a car loan.

Many companies today offer their clients to apply for a car loan in a showroom, arguing that it is much faster and easier. In fact, it’s really simpler, but before agreeing to such an offer it’s worth finding out some details. Namely, the banks that offer such lending, what insurance you will have to pay when receiving this loan, what fees, and most importantly, study the terms of the loan well. Moreover, not all car dealerships have representatives of a bank or financial institution offering loans, which means you will still have to go to the bank to conclude an agreement.

Not long ago, car dealerships began offering their customers another scheme for obtaining a car loan. Namely, you enter into an agreement with a company specially created for such purposes, receive the necessary loan, and then company representatives transfer your documents to the bank. But, fortunately or unfortunately, this scheme has not yet received wide distribution. Therefore, experts still recommend that if, after weighing all the pros and cons of a car loan, you decide that it’s worth taking out the money, you go straight to the bank. This will save time and money.

It is also very important, before taking out a loan at a car dealership, to familiarize yourself with all the possible lending options and calculate everything well. This will allow you to truly choose the best lending option. By the way, the conditions in a situation where you enter into an agreement directly in a salon or in a bank are absolutely the same. That is, salons do not charge any interest for concluding an agreement on the spot.

Exists a number of standard requirements that must be observed when applying for a car loan. This:
pledge agreement;
the car must be insured;
There must be a contract of authorization for vehicle registration.

There is also standard list of transactions and payments that must be completed when concluding a loan agreement. Namely:
commission for issuing a loan (by the way, not all banks charge it, and this is a way to save money);
payment for opening an account to which the amount required for the loan will be credited;
payment of the state fee for drawing up a pledge agreement;
payment for the procedure for entering a car into the general register;
payment for settlement and cash services at the bank (it is also necessary to clarify, there are banks that do not charge it);
car insurance.

Also, when registering a car, you will have to pay for MREO services (obtaining a car license plate, diagnostics, etc.), make contributions to the pension fund, and pay a transport fee for the year (its amount depends on the engine size of your car).

Another very important point is car insurance contract. The point is that in the fight for the client, some insurance companies do not behave entirely honestly. Some conditions are written “under an asterisk in fine print.” That is, having concluded an agreement, you only later find out that the amount of your deductible, for example, is about 50% of the insurance payment, etc. Therefore, the car insurance contract must be read and studied very carefully. By the way, the Antimonopoly Committee monitors insurance companies and the correctness of their work. Employees constantly conduct various checks in the field of lending; today a large number of criminal cases have been initiated in connection with illegal transactions, etc. But you also have to be very careful when signing documents.

What are the pros and cons of a car loan, provided it is issued at a dealership? It would seem that there could be some disadvantages, because you can immediately resolve all issues on the spot, show all the documents you have, conclude an agreement and leave the showroom in a brand new car. But experts say that when applying for a car loan directly at the dealership, many people overpay. Why this happens is written below.

Advantages of taking out a loan at a car dealership:

Time saving;
simplified loan application procedure;
An individual manager is assigned to the buyer, who manages the buyer’s business until he receives the keys to the car. Managers can also register the car with the traffic police and other necessary authorities;
Most often, a car dealership will offer you lower loan rates than a bank. Loan rates from banks working in tandem with the salon start at just 0.01% per annum, subject to a down payment of 60%. Whereas conventional credit systems provide about 5.5% per annum with a contribution of 75%.

Disadvantages of a local car loan:

The car selection options are limited. Only those that are available in this salon;
lack of flexibility in choosing a car insurance policy.
Expensive insurance when buying a car on credit, with a zero down payment.

People of working age whose regular income is sufficient to make monthly payments can apply for a loan. There are many loan programs on the market that can be applied for at a bank or directly at a car dealership.

The advantages of car loans are:

• Opportunity to buy a car in a short time. You have the opportunity to buy a car with minimal savings, which can be used to pay a down payment or without any. The main thing is that your current income is enough to repay the received car loan.
• Preferential car loans. The state encourages the purchase of cars produced in Russia by compensating part of the interest on the loan. The support applies to cars of various brands assembled in the Russian Federation. The maximum price of the car is limited to 750 thousand rubles.
• Long payment period. Banks issue car loans for a period of 1 to 5 years. If you choose a long term, the monthly payments will be insignificant - this can be convenient. However, in this case the total cost of the loan increases.

The disadvantages of a car loan include the following:

• Strict requirements for borrowers. Car loans are not given to young people and pensioners, those with bad credit histories, those who have worked at their current job for less than three months, etc.
• The car becomes collateral. A car loan involves issuing money to buy a car. The purchased vehicle becomes a guarantee of repayment of the debt. This means that you run the risk of losing the car you purchased.
• Car insurance. Often, when applying for a car loan, it is necessary to purchase, which increases costs by about 10%. Sometimes it is possible not to purchase this insurance, but then the loan will be more expensive.
• An initial fee. A car loan can be obtained by making a down payment, which is usually 10-30% of the cost of the car. The lack of a down payment negatively affects the interest rate.
• Long registration procedure. Collecting and processing the necessary documents can take from several days to several weeks. Sometimes this process is accelerated by applying for an express loan, but the interest rate on it is usually higher than on a regular loan.
• Traffic jams. Despite the above disadvantages, a car loan is available to many Russians. The construction of new roads has not kept pace with the increase in the number of motorists, so moving along the main streets of cities becomes difficult.

Conclusion

This is a good tool for buying a car. It is worth resorting to when you need to purchase a car in a short time and you have confidence in the income that will be enough to pay off the debt. In all other cases, a car loan is less profitable.

Sravni.ru advice: Before buying a car, compare the costs that the car will require (fuel, maintenance, insurance, parking) and the costs of traveling by public transport. In some cases, traveling by taxi turns out to be advantageous.