Best Financing Ways To Buy A Car 2021

Best Financing Ways To Buy A Car 2021

Best Financing Ways To Buy A Car 2021

Looking for a vehicle, but still having doubts about the best financing to buy a car? Financing, consortium, or leasing? Do you know these options and what each one works for? Apply For Car Loan

Read the article and find out all about the different types, their advantages and disadvantages and even check out our tips to make the best choice for your pocket. Check out!

What is the best type of financing to buy a car?
Fulfilling your dream of buying a car can be less complicated than you might think. With planning and determination, you can reach your goal. If you are in great need of a car in the medium or short term, there are some alternatives that can help you make this purchase. For example financing, consortium or leasing. Understand how each alternative works and which is best for your purpose.

Let’s start talking and comparing financing with leasing, which are more similar proposals, for those who need the car in the short term. Then we will approach the consortium. Check it out below:

  1. Financing
    financing to buy a car
    You can get financing directly from the dealership or from banks.

Advantage of financed car – immediate removal of the vehicle.

Disadvantage of car financing – interest charges that vary not only between dealerships and banks, but also with the value of each car.

The Central Bank provides an updated table of fees charged by each financial institution. In the case of the car financed by the dealership, in addition to the interest rate, you will also pay the seller’s commission.

So, if possible, have a value to input. It’s even worth trying to give the used car as a ticket. This gives you access to lower interest rates and the amount to be financed is much smaller. The bigger the input, the better. Depending on the situation, it may be more advantageous to take out a loan from the bank to pay for the car in cash. It is necessary to compare the rates and see how much remains to be paid.

  1. Leasing
    Car Leasing
    One option to financing is leasing, which works as follows: The bank buys the car from the dealership and then you pay the institution a loan directly to be able to use the vehicle.

Advantage of buying a car by leasing – there is no IOF charge and you can finance up to 100% of the value without having to make a down payment .

Disadvantage of leasing – the car financed by leasing does not go into your name until the end of the lease, when your payments also finish.

It is important to know that in cases of default, the vehicle can be taken over by the bank in a shorter time than it would happen when delaying other types of financing.

How to know if the Financing or Leasing interest is abusive?
After knowing these two options, you may now be wondering what the best way to finance a vehicle is. Well, know that financial institutions have the freedom to practice car financing values that they consider ideal. This is because they take into account the customer’s analysis, their income, credit restrictions and other requirements.

With this information, they apply an interest rate according to each person’s default risk. But to find out if the interest on car financing is abusive, you need to analyze:

The Selic rate informed by the Central Bank for each institution. If it’s higher than reported, you may be the victim of abusive interest;
Whether the financial institution uses compound interest or interest on interest.
It is also recommended that you research as many financial institutions as possible before closing any deals. Look for information about them in specific consumer protection agencies and reserve only 15% of your salary to pay the installments.

If you cannot meet the car loan, get help with the first difficulty and try to renegotiate the loan. In the post How to renegotiate car financing we explain how to do it.

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  1. Consortium
    car consortium
    The third and last option to finance the purchase of a car is the consortium. The car consortium is a financing model where several people pay monthly a pre-established amount for a period determined in the contract. Each member of the contemplated group is given the right to buy the traded good.

Advantage of the consortium – there is no interest charge, only the administrative fees (sum of the Common Fund, Administration and Reserve Fund fees), which together are lower than those for financing.

Disadvantage of the consortium – you cannot get the car immediately unless you bid higher than the amount paid monthly.

When buying a car through a car consortium group, you should take into account that the amount of the installment must include the fees below:

Common Fund
Accumulate enough resources to purchase a good. The percentage to be paid is defined by the full value of the property divided by the duration of the group.

For you to understand better, let’s imagine that the value of a car is R$40 thousand. Now all you have to do is divide 100% by 60 months, which is the time established in the contract for this consortium. When doing this calculation, we see that the Common Fund rate will be 1.6%.

Administration fee
It is the percentage that remunerates the consortium administrator for the services she provides during the group’s management.

Using the previous example, let’s imagine that the management fee is 10% of the car’s value and that it must be paid for 60 months. If we divide 10% by 60 months, we have a monthly administration fee of 0.16%.

Reserve Fund
The idea here is to set up a reserve fund for emergencies. Let’s imagine that the Reserve Fund rate established in the contract is 5% of the car’s value.

Likewise, just divide 5% by 60 months and we will have a rate of 0.08%.

Consortia charge basically for two types of insurance: bankruptcy (default) and life (when a member of the group dies).

We are unable to calculate this rate because, in addition to varying according to the vehicle, it also varies according to the group involved.

Adhesion Fee
She’s barely mentioned, but you’re good to know she exists. This is the fee you pay for joining a consortium and is usually deducted from the administration fee. We also cannot calculate the value because it depends on the type of car and the group.

In addition, the contract must specify the administration fees, the value of the installments, the expected adjustments and what forms of contemplation, ie, raffle or bid.

Remembering that all values raised in this post are assumptions, just to support the calculation.

Tip: Check to see if the car pool company has credit restrictions.

Financing, Leasing or Consortium which is the best option to buy a car?
Now that you know the different forms of payment, check out a summary of each type of financing to buy a car:

types of financing
In order for you to find out which option best fits your finances, see how much it would be to buy a car in each of these modes in a simulation of financing a car of R$40 thousand.

comparative financing
Other expenses to consider before financing a car purchase
In order not to go too far, it is important to keep in mind that the loan installment is not your only expense. Add to it expenses with maintenance, fuel, gasoline, auto insurance , besides of course your other financial commitments.

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All of this must be taken into account when choosing the best financing for you to buy your car. If the financing is to buy a new car, also consider values for the license plate and documentation. Read More

Here on the blog we explain in detail how much it costs and how to save with it:

My new car: how to get a license plate without hiring a dispatcher.

4 important tips for those who are going to finance a car purchase
Give the highest amount you can as a down payment to get better installments and interest;
Don’t make a loan longer than the 4 year term or your car will be devalued even before you finish paying;
Research a lot before opting for a loan, especially the interest rates of each company;
If you can wait, save money to buy in cash or give preference to the consortium, as they are still the most advantageous ways to buy a car.

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