Features of a car loan for a used car
Money received from a consumer loan can be spent on any need, including buying a used car. You cannot purchase household appliances or real estate with a car loan. In most cases, the purchased vehicle serves as collateral that protects the bank from the borrower’s failure to fulfill its obligations.
The easiest way to get a loan for a used car is at a dealership or through a trade-in. He buys a car of his brand from the owner and sells him a new one. A used vehicle in such a salon undergoes training and has a verified history. Therefore, banks quickly agree to issue money for its purchase. It takes a little longer to apply for a loan at a car dealership that resells cars of any brand.
Getting money to buy a used car from an individual is more difficult. To do this, you will have to negotiate with the seller, obtain documents and bring them to the bank. Additional time will be needed to check the buyer’s credit history. Therefore, not all sellers agree to wait for a financial institution to approve a car loan.
Stages of obtaining a loan
You can get a car loan for a used car after filling out an application.
You can compose and transmit it in the following ways:
- at the bank office;
- in a car showroom;
- by calling the hotline;
- in the credit institution’s mobile application;
- on the bank’s website.
The application will not be accepted without:
- last name, first name, patronymic of the applicant for a car loan;
- marital status;
- information about education;
- information about the borrower’s property;
- places of work;
- salary amount;
- list of documents for the car, incl. CASCO and OSAGO policy numbers;
- seller’s passport details;
- copies of the purchase and sale agreement.
After confirming the application, the buyer must submit documents to apply for a loan independently, through employees of a car dealership or financial institution. Most banks cannot issue a loan for a used car without a CASCO policy. Therefore, the next step in obtaining a loan is purchasing an insurance policy.
Next, you need to contact the seller to receive an invoice for payment and sign a sales contract. With these papers, the borrower comes to the bank office to apply for a car loan. The manager gives the borrower a draft agreement with a payment schedule, the exact amount of the loan and monthly installments, and the date by which the debt can be repaid without penalties.
If the borrower agrees with the bank’s terms, he signs the agreement. After this, the credit institution transfers the money to the owner of the used car, and the buyer registers it in his name.
Conditions for obtaining a loan
For buyers of used cars on credit, banks put forward the following conditions:
- citizenship of the Russian Federation;
- age not less than 18 (21) and not more than 55 (60) years;
- permanent job with a stable salary.
There are also separate requirements for used cars:
- Age of the car. A Russian car should not be older than 5 years, a foreign car – 10 years.
- Country of issue. It is more difficult to get approval for a used Chinese car than for a European, Japanese or Korean one.
- Vehicle mileage. Some banks do not have this restriction.
Required documents
To apply for a loan for a used car, you will need to collect a package of the following documents:
- passports of the seller and buyer;
- PTS;
- CASCO and OSAGO policies;
- purchase and sale agreements;
- salary certificates or 2-NDFL.
Sometimes banks request other documents.
Ways to reduce interest rates
There are several ways to reduce your auto loan interest rate on a used car. First of all, you need to compare offers from different banks and study what is included in the payment. Especially consider the programs offered by the manager of a used car dealership. Often hidden in the monthly payment is a personal bonus for the employee who took out the loan.
If the buyer of a used car works at a permanent place of work and receives money on the card, you can submit an application to “your” bank. Sometimes financial institutions give discounts to salary clients or reduce interest rates.
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Some banks are trying to insure themselves against non-payment of loans. Therefore, the offer indicates an increased interest rate. In consultation with the manager, you should ask whether it can be reduced if additional documents are submitted confirming the borrower’s solvency, for example, a 2-NDFL certificate.
Taking out a CASCO policy is not included in the list of mandatory requirements to obtain a car loan for a used car, but without it banks:
- raise interest rates
- increase the down payment
- reduce the loan term.
These measures increase the bank’s protection, since the car remains pledged to the bank until the debt is repaid and the financial institution is interested in its safety. You can buy a CASCO policy at a bank office or car dealership in advance. To do this, you need to obtain information about the VIN number or a copy of the vehicle passport (PTS) from the seller.
Sometimes car dealerships that sell used cars hold promotions. They reduce the price of used cars for buyers who have signed up for CASCO insurance from the seller. You cannot get a discount without an insurance policy.
You can reduce the interest on a loan for a used car if you insure the health and life of the borrower. Most banks indicate the difference in rate with and without a policy in the loan calculator. Personal insurance is sometimes referred to as financial protection, or a guarantee of the value of an asset.
GAP records the price of the car at the time of purchase. The car does not become cheaper over time; the owner receives full compensation in the event of theft, damage or complete loss in an accident.
How to increase your chances of approval
Banks can refuse a car loan for a used car for many reasons. Firstly, the borrower does not meet the requirements of the financial institution. He may be a citizen of a foreign state, older or younger than the age limit.
The second reason for refusal is a damaged credit history. It stores information about delays and non-fulfillment of loan obligations. They lower your credit score and increase the likelihood of rejection.
The applicant’s high debt load reduces the chances of approval. If existing loans account for more than half of the applicant’s income, he will most likely be denied a new one.
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Sometimes, when checking the information in the borrower’s application form, the bank finds errors. After double-checking the information and confirming any inaccuracies, the loan will not be approved.
To increase the likelihood of a positive decision, there are several steps you can take in advance.
First of all, check your credit history. This can be done through a bank or on the government services portal. If errors are found in it or information about loans that the client did not receive, it is necessary to collect supporting documents and correct the inaccuracies.
Reduces the likelihood of failure to repay existing loans and borrowings. This reduces the credit burden on the client.
If the reason for the refusal of a car loan was a bad credit history and it was not possible to correct it, the borrower has the following ways to get money to buy a used car:
- accept the terms of the agreement with an increased interest rate;
- leave property as collateral;
- find another credit institution that is less picky about borrowers.
If the reason for the refusal of a car loan was a low level of wages, you can declare additional income. In addition, a co-borrower or guarantor is often invited to repay the debt instead of the client.
Which bank to get a loan from?
The top car loans for used cars include the following banking products:
- for any car at Alfa-Bank up to 13 million rubles at 29.99-36.7%;
- at VTB Bank up to 10 million rubles at a rate of 26.5%;
- at Uralsib Bank up to 13 million rubles with an interest rate of 25.7%;
- in T-Bank up to 8 million rubles at 20.8% per annum;
- for the purchase of a used car from Gazprombank up to 7 million rubles at 29.9%;
- at Sovcombank up to 3 million rubles at an interest rate of 14.9-33.99%.
To apply for a car loan in most financial institutions you will need 2 documents. You can submit an application online on the bank’s portal or through the mobile application.
Cover photo: Freepik
Source: rb.ru
