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Does the design of a car loan have pitfalls. Pitfalls in car loans in car dealerships. Where and how to apply for a car loan

Every day the speed of human life is steadily increasing. Accordingly, the mobility of each of us increases. A personal car has long ceased to be a luxury and is often a necessity. However, not everyone can afford such a purchase. A good solution in this situation can be a car loan. The pitfalls of this phenomenon have become the topic of our today's article.

A loan for the purchase of a personal "iron horse" is offered today by almost every financial institution. But how to be sure that you have issued the Pitfalls when receiving money or the car itself can be hidden so skillfully that you can only find them when you start fulfilling your obligations. To avoid bondage, you need to carefully consider each stage of car registration.

Consultation

So you've decided to take out a car loan. Pitfalls are prepared for you already at the time of the first consultation. In 90% of cases, you will be offered to draw up a loan agreement for a so-called promotional car. And they will do everything very quickly and right in the cabin. Thus, chasing the seeming cheapness, you have a chance to leave the dealer on the car that was not even considered as a purchase.

By applying for a car loan at a bank, you will be spared from such impositions.

Signing an agreement

We continue to study the pitfalls of a car loan. The next step is the price of the car. The price list most often indicates the cost of the so-called basic configuration. Therefore, to begin with, it is worth finding out the full amount, taking into account the various “appendages”. This will be the real price that you need to focus on. The cost of the car indicated in the leaflet, in 99% of cases, is nothing more than a publicity stunt.

In order to force a client to buy a more expensive car, many managers argue that the availability of a complete set above the average is a requirement of a banking institution. Most often this is not true. Almost the only point that employees of a financial institution can insist on is the installation of an anti-theft alarm.

Where to apply for a car loan? Pitfalls can wait for you at every step. Therefore, before signing the contract, try to carefully study each of its letters. Moreover, it is best to do this not at the place of registration, but at home, in a relaxed atmosphere. Ideally, you should involve a lawyer who understands such things in the process. If everything is honest and transparent, then both in the bank and in the car dealership you will be given a copy of the standard contract for detailed study without question. If such a request was denied, think about it! Probably the lender has something to hide. Is it worth getting a car loan in a place like this? That's your business.

Loan offer options

And here are some more pitfalls of a car loan. Is it better to issue it in car dealerships or in a bank?

On the one hand, when drawing up a loan agreement right in the salon, you are limited to choosing a bank. It will be possible to get a loan only in the credit institution with which the dealer has concluded an agreement. It is far from a fact that the proposed conditions will be the most favorable. On the other hand, the process will take much less time, and you will need a minimum of documents.

At the same time, when applying for a loan at a bank, you will choose from a standard package of services. And by signing the contract directly in the showroom, you can count on any promotional offers. Dealers quite often develop such programs together with banks. So before signing papers, it is better to calculate all the options.

"Interest-free" loan

So you've decided to take out a car loan. Pitfalls (what to fear) are hidden here very skillfully. Take, for example, the tempting 0% interest rate. As you understand, the bank is not a charitable organization, which means it will not work without profit. Accordingly, it cannot be. All the profits supposedly not received by the financial institution have long been included in various additional commissions, the initially overpriced cost of the car, and the costs of paperwork.

  • loan term - no more than 12 months;
  • down payment - at least half of the cost of the car;
  • compulsory insurance in the place indicated by the bank.

In addition, a wide variety of requirements can be added, which ultimately negate all the savings.

In order not to “get involved” in such a situation, ask the manager to write down step by step on a piece of paper all your design actions. At the same time, enter as accurately as possible all the amounts of the cost of forms, permits, insurance, commissions for account maintenance and similar payments. Take a break for a day or two and take an interest in similar offers from other banks. Perhaps your "interest-free" loan will not be so profitable.

fines

To avoid trouble in the future, try to immediately find out what fines and for what the bank can impose on you. You should not sign an agreement that provides for the accrual of a huge penalty for every minute of delay in payment. Assess your financial strength realistically. You also need to take into account the likelihood that the financial flow of incoming funds may decrease. For example, you or your beloved cat gets sick. Or maybe the company you work for will cease to exist altogether. In this case, you will have to contact the bank about the restructuring. Immediately ask if this is possible, and how exactly this process will take place.

Some banks impose a penalty for early repayment of a loan. After all, in this case, they will not receive the profit they expected. Consider whether these conditions are right for you.

Sometimes credit institutions impose penalties for late notification of a change in personal data. This means that if you change your place of work, phone number, or suddenly get married / divorced, then the bank should know about it. Late notification may result in the imposition of a fine, penalties, as well as the requirement of the bank to immediately repay the remaining amount of the debt.

Related costs

And where else can the pitfalls of a car loan be hidden? In an attempt to attract as many customers as possible, many financial institutions or car dealerships hide information about what other expenses the client will have to bear until the last moment. And they can be like this:

  • fee for opening a bank account and its maintenance;
  • various insurances;
  • payment for the conversion of the loan amount;
  • various fines;
  • bank commission for transferring funds to a car dealership;
  • payment for bank services for the preparation and consideration of the application;
  • credit business.

insurance

Have you thought about taking out a car loan yet? Pitfalls await you in terms of car insurance.

First of all, be prepared for the fact that you will not be able to apply to the UK of your choice. You will be obliged to cooperate with the company that has an agreement with a car dealership or a bank. In addition, the bank may require to insure not only cars, but also other risks:

  • your life and health;
  • risk of non-repayment of a loan in case of loss of a source of income;
  • other risks.

Of course, you can refuse. But who will guarantee that you will receive a loan in this case?

There are a few other things to consider when taking out insurance:

  1. If you issue a regular CASCO policy, the insurance company takes into account that the cost of the car decreases every year. Accordingly, the policy from year to year will cost less. In the case of a loan car, the amount of the insurance premium will remain unchanged for the entire loan period. That is, the car "gets old", but you will still pay as for a new one.
  2. Also in this case there is no chance to get a bonus malus. This is such a discount, which is provided by the UK for break-even driving. No matter how much driving experience you have, this will not affect the cost of a CASCO loan car in any way. You will have to pay in full.
  3. In addition, if you draw up CASCO for a car loan, you lose the opportunity to pay insurance premiums in installments. In this case, the entire amount will have to be paid immediately.

Summarize

If you carefully read our article, you already know what pitfalls exist in a car loan. The only rule for those who do not want to get into trouble is one thing - do not rush. If you used to live without a car, then you can certainly hold out for a few more days. This time is just enough to carefully (and preferably with a lawyer) study the contract and read everything, even the smallest letters. In addition, you need to carefully recalculate all the numbers and determine the amount that the car will cost you in the end. Remember: if the euphoria from the upcoming purchase does not overshadow your eyes, you are not afraid of any pitfalls.

Applying for a car loan is quite easy. But to do it correctly and get around the pitfalls when buying a car on credit is already much more difficult. Where are credit traps hiding and how can they be bypassed?

Attractive interest rate

The low interest rate indicated in various advertising sources does not always correspond to the real cost of a car loan. Lenders have two concepts regarding interest:

  1. The interest rate is the figure that sounds in the advertisement and is indicated in the contract in large bold print. It can be called nominal, since the main body of a car loan is calculated on it.
  2. The total cost of the loan (effective rate) - this figure is also calculated as a percentage and is written in the contract, but in a smaller font that is invisible to the eye of the borrower. It is she who is real, because the calculation takes into account all the additional commissions that the borrower must pay for the entire term of the car loan.
In order not to run into the pitfalls of a car loan regarding the interest rate, it is better to clarify in advance what percentage the effective rate will be. After comparing the two values, you can decide if this program is really suitable.

"Free" car loan

“Car loan at zero%” - a similar inscription flaunts on many advertising signs. But what lies behind such wonderful conditions? As a rule, the pitfalls when buying a new car with an interest-free loan lie in fairly tough lending conditions. As a rule, this is:

  • the loan term is not more than one year;
  • the down payment must be at least 50 percent of the cost of the car;
  • you will have to insure the car in the company where the lender will send, most likely, the cost of the policy will be overstated by thirty percent;
  • the lender may insist on installing an expensive alarm on the purchased car (of course, at the expense of the borrower).

And this is far from a complete list. Each bank will have its own conditions under which it is ready to provide the borrower with a “free” loan. So it’s better not to rush, but to find out how much such a loan program will cost.

Nuances of insurance

Car loans assume that the object of purchase will be the collateral. And by law, collateral must be insured. An insurance pitfall when buying a car on credit will be the requirement of a financial institution to issue a policy from a certain insurance company.

As a rule, the bank maintains relations with one or more insurance organizations. And for the execution of the policy, the lender receives a commission. The borrower pays for such a tandem with increased insurance premiums. At the same time, it is often necessary to issue a policy immediately for the entire term of the car loan. And this is quite a significant financial loss.

If an insured event occurs, the borrower should not immediately stop monthly payments for a car loan, thinking that the insurance company will pay off the debt. To begin with, the creditor must provide the debtor with a certificate stating that the insurer has transferred the amount that covers the debt. After that, the loan agreement is closed, about which the borrower will be informed. Typically, such procedures are delayed for several months.

Another pitfall may be the condition of life and health insurance of the borrower, which the latter learns about only in the process of signing a loan agreement. Most often, this type of insurance is required when a complete package of documents is not provided. Or in the case of express loans.

Where else lies the catch

Often, the tricks of applying for a car loan lie at the bottom or at the end of the contract. They are written in small print. This is the easiest and favorite way for all lenders to hide important information from the borrower. Experts recommend starting reading such papers with small print.

One of such pitfalls specified in the contract may be the object of pledge. There are creditors for whom the purchased car is not suitable as a guarantee of repayment of the debt. They require an apartment, land or other expensive property as collateral.

There are also such tricks in the loan agreement, such as notification of a change in the borrower's data. The lender obliges the debtor to report changes in the life of the borrower, such as a change of job, place of residence, mobile number, and so on. In this case, if the specified requirement is not met, the bank has the right to impose penalties. The fines can be significant.

Relatively recently, a car loan product without a down payment appeared on the market. A buyer went to a car dealership to admire brand new cars. And he was already a car owner. This is possible with the professional work of a manager. Pitfalls in this case lie in inflated interest rates.

How not to fall into the trap

To get around the pitfalls when buying a car on credit, you can use a few tips:

  1. Car loans are serious business. When choosing a loan program, do not rush. Study the proposals you like, clarify for yourself all the incomprehensible points. This will help you choose a really profitable car loan.
  2. Be sure to check with a loan officer what the effective rate on a car loan will be if the contract is signed. Even better, insistently ask for an exact payment schedule for the entire car loan period. This will allow you to understand how much the loan will actually cost.
  3. It is better to choose a bank where there are no strict restrictions on the choice of insurance agents. This will save up to 30% of the cost of insurance.
  4. And the most important tip. You need to know your rights. To do this, it is better to study the law "On the Protection of Consumer Rights". This will avoid pitfalls not only in the field of car loans.

Car lending is a complex procedure for obtaining funds for the purchase of a car, during which the interests of the bank, car dealership and insurers are affected. Therefore, at each stage, you should be extremely careful.

The pitfalls of a car loan in car dealerships is a question of interest to every car enthusiast who has decided to purchase a vehicle on credit. After all, it is no secret that credit organizations, offering various lending programs, are in no hurry to talk about their disadvantages. The primary task of the lender is to interest the buyer, and for this it is necessary to highlight his positive rather than negative sides as much as possible.

The article provides information about the features of car loans in 2017-2018, the tricks of salons that you can fall for when drawing up a loan agreement, as well as issues related to aspects such as insurance and collateral. In addition, you will be able to find out what cons of a car loan you need to consider before making a final decision.

What you need to know about car loans

A car loan is a program that involves the issuance of a certain amount to the borrower, necessary for the purchase of a car. Like other types of loans, say, for equipment or housing, automobile loans provide for the fulfillment of the conditions established by the agreement.

Contracts of this kind are classified as paid, urgent and bilateral. This means that, firstly, the money received in the form of a loan must be returned, secondly, this must be done within a certain period of time, and thirdly, if one of the parties wishes to change the terms of the agreement, this can be implemented only if consent of the other party.

At the same time, it should be borne in mind that not only the funds received are subject to return, but also the accrued interest. Moreover, some agreements provide for the payment of a commission. And in case of non-compliance with the terms of the contract, you will also have to pay a fine.

Differences in loan programs

Today, there are many lending programs that provide for various conditions for obtaining a car loan. The main differences between these projects are as follows:

  1. in the amount of the annual interest rate;
  2. during the term of the loan agreement;
  3. there is a requirement to make an initial contribution, as well as in its amount;
  4. in the presence of additional payments, such as commissions, fines, penalties, as well as other types of penalties;
  5. the need to secure a loan;
  6. in the debt repayment scheme.

Features of car loans

Although a car loan is a type of loan, it has some differences from other types of loans. So, in the conclusion of the transaction, not only the parties to the contract in the form of a lender and borrower, but also a car dealership or a dealer take part. The task of the latter is to make every effort to ensure that the loan is issued and the vehicle is sold. Only in the case of a successful conclusion of the contract, the car dealership will make a profit. The issue of customer benefit is not a priority for the salon, so you should evaluate the positive and negative sides of the transaction yourself.

Also, a feature of a car loan is the fact that banks under agreements, the subject of which is a vehicle, most often require collateral or insurance. This is justified by the fact that during the operation of the car it can deteriorate. This is not to mention the changes in the vehicle that may occur to him as a result of a traffic accident.

Underwater rocks

Despite the fact that credit organizations present car loans almost as a charitable act, they have much more minuses than pluses. Each program, including preferential ones, has its own pitfalls, the features of which will be discussed below.

Tricks of car dealerships

First of all, it should be borne in mind that the profit of a car dealership directly depends on the success of a loan deal, so its employees will make every effort to ensure that it is concluded. To achieve this goal, various tricks and tricks are often used.

As a rule, car dealers cooperate with a limited number of banking institutions, so you should not count on the fact that you will be offered the most favorable conditions. You will have to conclude an agreement with the credit institution that works with the car dealership. In this case, the client can simply be told that other banks refused to issue him a loan due to his non-compliance with the requirements of the lender.

Quite often, car dealerships take such a step as overpricing a car, justifying this with a low interest rate on a loan. As a result, you pay less interest, but the body of the loan itself is larger. This is equivalent to buying a vehicle at the regular price, but with a higher interest rate.

Auto pledge

To ensure the repayment of the debt, banks require the provision of collateral. As a rule, this is the purchased vehicle. Less commonly, real estate, jewelry, and other vehicles owned by the borrower can become the subject of collateral.

What is fraught with the provision of collateral for the borrower:

  • the property acting as a pledge cannot be sold during the period during which the contract is valid;
  • in case of failure to comply with the terms of the agreement, the creditor may demand repayment of the debt at the expense of the collateral.

Note! Having decided to issue a loan secured by collateral, you need to be sure that in the future it will be possible to fulfill it in full. If the financial situation has changed for the worse, there is no need to delay the debt repayment procedure, it is better to try to agree on its restructuring as soon as possible.

Insurance

Often one of the conditions for issuing a loan is insurance. The buyer is given the opportunity to draw up an insurance contract on his own or with the help of a credit institution. In the latter case, insurance costs are included in the loan amount.

Note! Cases when the borrower finds out about insurance after the conclusion of the transaction are quite common, therefore, before signing the contract, it is necessary to read all its sections. If the essence of any points is not clear, the borrower has the right to demand their clarification.

Hidden payments

Hidden fees usually mean commissions. Payment of a commission may be provided for the provision of such services:

  • issuance of a loan;
  • acceptance of monthly payments;
  • performance of operations on the credit account;
  • loan repayment ahead of time;
  • providing informational information.

It is necessary to pay special attention to the presence in the contract of the requirement to pay a commission, since due to such a payment, the loan amount can increase significantly.

When choosing a lending program, experts advise following these recommendations:

  • do not focus on one project, work on several options. Now each credit institution has its own website, which provides information on the conditions for issuing loans and requirements for the borrower. Compare several options and choose the most profitable;
  • before signing the agreement, carefully study all its clauses;
  • treat the provision of collateral with caution, do not forget about the restrictions with which this is associated;
  • carefully study the terms of the contract, especially those related to the interest rate, commission payments and penalties.

Probably, many of us, when it comes to a large amount taken on credit to buy a car, begin to think about how to avoid fraud with a car loan. Is there a scam when applying for a car loan? Although, in fact, deceit - it may be said too loudly, but let's try to figure out what inconsistencies pop up after signing a car loan agreement.

Car loan scam options

First of all, what is a car loan? The name of this type of banking product directly indicates the purpose of its use, that is, the bank issues a targeted loan to the applicant for the purchase of a car. The terms of banking products differ in:

  1. car loan amount,
  2. car loan interest,
  3. Auto loan repayment period
  4. The amount of the first installment on the loan,
  5. The presence or absence of additional payments.

The main condition for securing a car loan for a bank is the purchased car as collateral.

What kind of deception can lie in wait for someone who applies for a car loan to a bank or a car dealership:

  • The discrepancy between the promised payments on a car loan and what will actually be charged. That is, there may be some hidden interest or other payments.
  • The overvaluation of the cost of the car for which a car loan is issued is higher than the market value.
  • A promise to get a loan without a down payment, but in reality it turns out that you will need to pay some amount, but under a different name.
  • The inclusion in the car loan agreement of a clause that in case of early repayment of the loan, an increased percentage is charged.
  • It may also turn out that if you change your mind about taking a car on credit after signing the contract, you will need to pay a penalty in the amount of 50% (for example) of the cost of a new car.

Of course, all options for deception with a car loan cannot be taken into account, since life does not stand still. Just like computer viruses, which are constantly improving and becoming more difficult to recognize, the options for cheating with a car loan can also improve.

How to get a car loan without cheating

First of all, in order to avoid deception with a car loan, you need to read carefully enough, and not just read, but study the documents that require your signature.

Otherwise, after an inattentively read and signed car loan agreement, some enslaving conditions that were missed when studying the document will begin to legally operate.

To avoid deception with a car loan, you should invite a familiar lawyer with you to the bank, who will help you recognize all the nuances in car loan documents. If the bank allows you, then it is better to take unsigned documents with you, in order, again, to study in a calm atmosphere.

Bank car loans without cheating

  • The most common car loan with a down payment. The amount of the contribution in different banks can vary from 10 to 50 percent. The larger the amount of such a contribution you are able to pay, the more favorable the terms of the car loan will be.
  • . There is no installment, there will be much more interest on the loan and, maybe, other payments.
  • Popular among hurried people is an express car loan. Available for registration on the day of treatment with minimal documents and significant interest on the loan.
  • Car loan without CASCO registration. Again, if it is not required, then the percentage on a car loan will be more significant.
  • . The interest will be higher than when you get a new car on credit.
  • Obtaining a credit car in installments or, in banking terms, arrange factoring. The advantage of factoring is that there is no interest. The downside is that you are offered a small selection of last year's cars or slow-moving models that you want to sell.

    • In addition to the above conditions for granting a car loan, there are not so common, borrowed from Europe, programs for providing a loan to buy a car or, one might say, rent a car:

    • . At the end of the car loan term, it is allowed to return the car to the car dealership in exchange for a new one. It is also possible to sell the car and pay off the car loan amount ahead of schedule.
    • Trade-in car loan. The bank offers you to take the missing amount for the purchase if you hand over a used car to a car dealership as a down payment.

    How to avoid car loan scams

    Three basic rules will help you:

    1. Read carefully
    2. Scrupulously study - calculate the conditions,
    3. Consult on all emerging issues.

    Car dealerships and banks in general often sin by actively imposing additional services - additional equipment that allegedly cannot be removed from the car, insurance, without which they will not give a loan, expensive CASCO, etc. Yulia told how in a car dealership, when buying a car on credit through Plus-Bank, she was sold a contract for round-the-clock evacuation services, technical assistance, legal assistance in case of an insured event, etc. The cost of services is 135 tr. The case is not isolated, many complaints of victims can be found on Bankakh.Ru and website Associations of Russian banks.

    What are the tricks?

    • The cost of an unnecessary service is included in the loan amount.
      That is, you a) borrow much more than the planned amount; b) pay interest on the loan on the cost of the imposed service.
    • The loan manager explains that without buying additional services, a loan will not be given.
      This is a direct violation of the law "On the Protection of Consumer Rights" (Article 16), which prohibits the imposition of additional paid services. But there is a problem: according to the law, the bank is not obliged to give a loan to any applicant. Those. refusal to issue a loan in case of refusal from imposed special stages is quite real.
    • Unfavorable conditions for terminating the contract.
      The company withholds 30% of the premium paid upon cancellation of the contract in the first month, plus 5% for each subsequent month. According to the law "On Protection of Consumer Rights" (Article 32), an unmotivated cancellation of a contract for services / work is possible provided that the contractor is reimbursed for the actual costs incurred, and not a fine in a fixed amount. But you will have to challenge the terms of the contract only in court.
      If you want to try to terminate the contract under article 32 of the LOZPP: procedure , claim example .
    Julia writes that she bought a car with a Plus-bank loan. Together with the loan, she turned out to be the owner of contracts for 135 thousand rubles with Ring-M for Consierge and VIP Assistance services.

    What to do if they impose additional services to a car loan?

    • The best option is not to conclude an agreement with such a bank / car dealership at all.
      In the case of mass schemes for selling expensive and unnecessary additional services, usually a refund can only be made through the courts. This is a few months of your time + expenses for a lawyer + there is always a chance that there will be problems with the execution of a court decision (the company suddenly does not have any money, or it simply merges).
    • Do not give a loan without attachments?
      Vote with your feet, go to another bank and car dealership.
    • Has the contract already been signed?
      It remains only to write a claim and then go to court. If something is paid voluntarily, make a partial early repayment of the loan to save on interest on the loan.