car Financing: Find Out How It Works in 2021

car Financing: is one of the most coveted goods by Brazilians. But, as not everyone has the money to buy a good of this size, companies work with car Financingthe vehicle financing is an alternative for those who want to buy a car, but does not have enough money. However, it is important to understand how it works and if it is worthwhile, especially looking at the financial planning of each one.

What is car Financing?

Vehicle financing consists of borrowing a certain amount to be used to purchase a vehicle.

Therefore, this procedure is done directly with the bank, and it is possible to purchase cars, motorcycles, trucks and even tractors in installments. There are some types of this service on the market, but most of them are subject to interest and fees.

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How does car Financing work?
First, it is necessary to know that the financed vehicle can be acquired through public or private banks through the Direct Consumer Credit (CDC) .

Therefore, contact must be made directly with these financial institutions , so that it is possible to talk to the manager

About the car Financing

Financial leasing: an option to buy in installments
Financial leasing: an option to buy in installments
However, each financing is different. The amounts of the benefits can change according to the salary of the person who wants to purchase the vehicle. In addition, you need to be aware of interest rates so that they are not abusive.

Therefore, it is seen that the negotiation is carried out directly between the consumer and the bank in car Financing, without the dealership taking part in this negotiation.

Finally, there is the possibility of leasing , which consists of renting a car and allowing the option to buy it. In addition, the consortium is another possibility, where the person receives the car only when drawn.

What is the difference between financing for new and used cars?
In fact, the possibility of financing a motorcycle or car is not only valid for new vehicles, but also for used ones.

However, in some banks, they can only be financed if they are up to 10 years old. Others accept vehicles up to 12 years old. If it’s a motorcycle, the time drops to five years of manufacture.

Between consortium and financing, what is the best option?
Between consortium and financing, what is the best option?
Also, a benefit of financing used vehicles is that these used vehicles tend to be cheaper than the brand new versions. But, hardly the total amount paid for the vehicle will be equal to the Fipe Table .

This is precisely because it will be necessary to consider the interest and car Financing rates applied by the bank responsible for your purchase, in addition to the cost associated with the IOF, which also affects the Total Effective Cost (CET) of the good.

Therefore, the acquisition tends to be more expensive than if a cash payment were made.

It is important not to confuse car financing with the installment purchase made directly with the dealership. In the case of car Financing, the purchase of the desired vehicle is made directly by the bank.

Even if you chose it at a reseller partner of the institution. And this can be done for the purchase of cars, motorcycles, trucks and even tractors.

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How to get a car Financing?

Some banks make it possible to finance vehicles directly on the internet. However, it is necessary for the customer to inform the brand, model and year of the vehicle they want. From then on, financing options will be made available.

Consortium member: find out the main fees to be paid in the consortium
Consortium member: find out the main fees to be paid in the consortium
However, offers may vary from customer to customer, depending on their relationship with the bank and credit.

At Banco do Brasil, for example, you must have already chosen the car or motorcycle in question, since the company asks the customer to send a copy of the Invoice or Vehicle Registration Certificate.

In addition, it is worth noting that not all banks accept 100% financing of vehicles. Therefore, you may need to give an entry for the acquisition.

However, there are banking institutions that allow car financing without down payment .

Finally, installment payments are usually made within 60 months for cars. On the other hand, in the case of motorcycles, this period may be shorter.

What are the fees charged for car financing?
First, it is necessary to know that the interest rates for vehicle financing are fixed at the time the contract is carried out, with no changes occurring during the payment of installments on account of interest.

Thus, currently the interest rate to finance cars is between 0.8% and 3.8% per month. In practice, large banks usually charge between 1 and 2% a month. It is worth noting that, through compound interest, this amount becomes high at the end of the loan .

Second, it is possible that there is a variation in the value of the installments due to the variation in the price of the car, which can either increase or decrease its value.

In addition, the IOF is charged at the beginning of the contract , and it is necessary to be aware of the payment of this tax.

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Is it worth taking out car Financing?
In fact, financing makes the purchase of vehicles much more expensive. Therefore, this option is usually not so interesting.

Therefore, the ideal is to establish a specific date for the purchase and, during this period , choose a financial investment whose income helps the consumer to raise the necessary money for the cash purchase.

Vehicle debt: understand how it works and how to pay it off
Vehicle debt: understand how it works and how to pay it off
In addition, by purchasing a vehicle in cash, it is possible to claim a greater discount, which is another benefit of not financing.

Therefore, it is important to use a simulator before closing the contract to find out if this purchase is really worth it. In some cases, you pay the value of two cars for just one car Financing

In fact: paying for the car in a planned way is a way that many people use to acquire a car even without having enough money to buy it.