Auto Financing 2021 movable property, especially vehicles, you have the option of doing legal business with the financing institution through a LEASING or CDC contract.
These legal instruments are distinct. Direct Consumer Credit (CDC) has a financing nature (“installment payment”) and LEASING has its own legal characteristics, not constituting a financing operation. car loan
The fact is that when the consumer “finances” a certain vehicle through Leasing, the asset is in the name of the finance company until all installments are paid. This is what we call a lease, a kind of “rent”. The consumer has ownership, but only becomes the owner when the financing is paid off.
Auto Financing 2021
As for the CDC, on the contrary, the acquirer will have the vehicle in his name at the time of purchase and this will only be the guarantee of the financing made with the bank.
In Direct Consumer Credit there is a facility for anticipating installments with the respective reduction in value, while in LEASING this option is restricted. Another advantage is that in CDC, the buyer defines the number of installments, while in LEASING the minimum mandatory period for vehicles is 24 (twenty four) months.
However, when granting credit through LEASING, the consumer does not pay Tax on Financial Transactions (IOF), on the contrary, the tax that must be paid is the Tax on Services (ISS), but, due to the greater security of the business for the bank, interest rates are generally lower. The consumer/taxpayer, in addition to analyzing the chosen financing projection, must take into account the IOF and ISS rates and verify the interest rate applied to each type of financing and the percentage charged by the most diverse financial institutions.
Lenders also charge some fees that must be observed and discussed, such as, for example, Credit Opening Fee, Payment Slip Fee and Third-Party Services and similar. But, if there is no way, in court there is a possibility of success. Currently, the Judiciary has consolidated the understanding of illegality.
Auto Financing 2021 importance
Auto Financing 2021 it is much less bureaucratic to sell an asset that is still financed when it is carried out by the CDC. In LEASING, to resell the good, authorization from the finance company is necessary and has its costsIt’s known as vehicle refinancing.
Among the various types of credit there is a loan with a vehicle guarantee, which works as a refinancing of the asset. In it, you offer your car or motorcycle to provide more security and get a price based on the price of the vehicle. Some banks and Auto Financing 2021e companies may offer between 50% to 90% of the car’s value .
Your car or motorcycle can be used as a warranty
You can use either your car or your motorcycle as collateral. But the vehicle must be paid off and in your name. If you are married, you will not be able to apply for the loan if the vehicle is in your spouse’s name.
In general, interest is lower.
Auto Financing 2021 in this case, is a guarantee. That is, the bank or finance company has more confidence when lending money. That’s why the interest tends to be lower than other credit options.
How to know if the loan installment fits in the budget?
An analysis of your profile is carried out.
In addition to analyzing your name and credit score , your ability to pay can also be analyzed. Therefore, proof of income and address may be requested. There may also be other evaluation criteria that depend on each bank, finance company or fintech.
Auto Financing 2021 undergoes an evaluation
After analyzing your profile, the car or motorcycle must undergo an inspection. Among the criteria are the year of manufacture, mileage, conservation and market value of the vehicle.
It’s an option for those who are negative
Even those who have any outstanding debt or name restrictions can use the loan as collateral. Despite the analysis of your profile, being in default is not an impediment to getting this credit.
How to get a loan for negative?
Auto Financing 2021 restriction
It’s not because you’re offering your car as a guarantee that everything is cleared. The loan with a vehicle guarantee also has restrictions. In some cases, companies do not accept cars that are more than 15 years old. And newer vehicles have better interest rates.
The value may vary by vehicle
Both the amount borrowed and the interest rate can vary from car to car. That’s why there’s the vehicle evaluation.
your car gets alienated
When you use this type of loan, your car is alienated . That is, it cannot be sold until the debt is paid off.
What does it mean for a car to be alienated
If you don’t pay, your vehicle can be taken.
Another important fact to keep in mind when you offer your car as collateral is that if you don’t make the payments, the car can be taken over by the bank or lender. https://www.barclays.co.uk/loans/car-loans/