Tips For Car finance: how it works and what you need to do to get it.
After all, the car is an investment and not all buyers have the full amount to pay for the car at the time of purchase. For this reason, financing helps many people’s lives by facilitating the car purchase process. Apply For A Car Finance
However, the process still requires some documents and requirements to be approved. If you don’t know what the requirements are for financing a car, this article is for you. Follow the reading and find out!
- Having a clean name is necessary to finance car
A loan, whether for a vehicle, home or any other asset, is a form of credit. Which means that, in practice, it is like a loan: an institution will lend the value of the car and the consumer will return it in installments plus interest.
Knowing this, would you lend your money to someone who doesn’t pay their bills? Banks charge high interest rates for those with a bad history, but even charging higher interest rates, it won’t be a good deal if the person doesn’t pay the debt.
Therefore, there is no way to contract a loan, if the interested party has the name on the SPC and SERASA restriction lists, the popular “dirty name”.
If you are interested in financing a car, the first step is to ensure that your name is free of debt so you can be able to take on a loan.
- Be of the right age to get a loan
A financing process requires, in a way, a risk assessment. After all, if the bank lends you an amount of R$-10 thousand, for example, what is the probability of paying this debt? Considering all factors, the bank stipulates an interest rate that will offset the investment risk.
To carry out this risk assessment, one of the factors taken into account is age. There is, informally, a minimum and maximum age for approval of loans, especially for cars.
The minimum age considered is 20 years old. Banks and financial institutions assess that someone under the age of 20 does not have a strong enough purchasing history to tell whether or not they are a good payer. Therefore, it is difficult to approve a loan for those who are 18 or 19 years old.
The maximum age to be considered is 70 years old. Here the issue is different: as life expectancy in Brazil is 75 years, the perspective is that it is a risky business to approve financing to be paid in the long term, in this case.
However, it is possible to deal with these two restrictions using a guarantor. Someone who guarantees the bank or finance company that the loan will be paid, even if the beneficiary cannot pay it off.
- Have proven income to pay off the financing
One of the elements analyzed to know if the person interested in financing a car will be able to pay the loan is, of course, their ability to make payments, that is, their income.
According to the Law and good market practices, the financing portion may compromise, at most, 30% of the debtor’s monthly income.
Suppose, for example, that your salary is $1,200. In this case, the financing can be, at most, R$-400. On the other hand, if your monthly income is, say, BRL-5,000, then the maximum installment could be up to BRL-1,500.
It is important to clarify that income is not exclusively your salary. For example, you can receive 5,000$ in salary, but also receive BRL-900 in rent on a house, BRL-400 in an investment in Fixed Income, and BRL-900 in sales in your own business. In this case, the portion would accompany these extra income.
- Have a good credit score
You may not know this, but at this point, the major credit appraisers will give you a specific rating for your ability to pay off debt, based on your history, income, and other factors.
This score is called Score and is used every day by companies that are interested in lending money such as banks and finance companies.
Therefore, to finance a car, it is necessary to have a Score that is enough to earn the balance you want to have. Without a good track record, there is no way to do business.
- Having a value to check in is not mandatory, but desirable.
One of the most common elements when buying a financed car is the issue of down payment. After all, is it mandatory or not?
Technically, no. But it is so important when closing a deal that all credit providers prefer to deal with an entry.
There are ways to do business without having to have the 20%, 30% down payment, but usually this boils down to a much higher interest rate, which makes the business more expensive in the long run.
Therefore, even if the bank or finance company does not require a down payment, you may want to pay a good percentage of the vehicle’s value, before financing the rest. Read More
And now? Which store should you choose to finance your vehicle?
Now that you know how to finance a car, you can start getting ready to purchase your next vehicle. You can see that it’s a relatively simple process, isn’t it? Just prepare yourself with some documents and you won’t have any problems.
But remember that just as the bank prevents problems, you must also do the same. When financing a used car, choose a store that offers a certificate of origin, a 1-year warranty and its own workshop to handle vehicle maintenance.