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Car financing: how to choose the best option?

Just as you search for a car at the lowest price, in the common DCC (Direct Consumer Credit) financing, you should look for the plan with the lowest cost. That is, a bank that covers the lowest interest rate. After choosing the car you intend to buy, if it is a zero-kilometer, is to simulate a financing in the bank of the automaker itself. With the proposal in hand, talk later with the bank manager in which you have an account to see if you are able to cover it.

After all, he knows your financial life and health well and knows better than anyone if you have a good paying profile. Then, return to negotiate with the financial institution of the assembler, and only then close with the one that offers the most advantageous proposal. When negotiating, you need to consider all possible costs related to your “prospective car”; including fuel consumption, routine services, etc. You are even advised to estimate your fuel card balance. You can read up here if you need more info about the card.

Attention: don’t get carried away by the nominal values. Keep an eye on whether the proposal includes the TEC (Total Effective Cost), which includes any fees and taxes, such as Tax on Financial Operations. When negotiating, try to see what can be excluded. Your manager may, out of camaraderie, not want to charge you an open credit fee.

The interest rate varies according to several factors. The greater the risk that the bank will not receive, the higher the interest it will charge. On the one hand, the automaker’s bank wants to help it sell the car. On the other hand, the independent bank does not want to lose the business and will measure its risk.

How to find the best financing

In order not to have a headache: invest in the largest entry with the fewest monthly fees possible

If you live with your parents and do not have a property, the rate will be higher than if you have a $ 1 million property in your name. Therefore, the greater the guarantee that the bank will receive the loaned money back, the lower the cost of the loaned loan will be. That’s what you need to bargain for when asking for financing.Another fundamental variable is the payment condition: a larger entry generates less interest; more installments cause higher interest. Therefore, the secret is to invest in the largest entry with the least number of monthly payments possible.

Balloon financing and leasing are alternatives for those who want to escape high interest rates

In addition to DCC financing, concessionaires can offer the interested party in a zero-km two other types of installments, still little known to the public. The first is the old lease, a type of lease where the customer can buy the vehicle at the end of the contract, which is widely used by legal entities.

The advantage is that there is no down payment and your interest is lower. The disadvantage: the car is in the name of the bank and the customer, arrested until the end of the contract term. It is for this reason that there is no point in paying off the installments ahead of time, as this does not reduce the total interest to be paid.

One modality that has grown in the last three years is balloon financing, offered today by most brands. The name refers to the last installment, which represents a high amount, somewhere between 15% and 50% of the car’s price. This final installment is paid with the sale of the used car to the dealership, which will use the surplus to enter another zero-km.