Automotive credit, how to obtain it in better conditions?

Do you want to buy a car for your own use or to convert it into a taxi? The first thing you should know is that the credits to acquire it are offered by banks, automotive agencies and self-financing agencies. They give you options to choose the term in which you will pay.

With this credit, the car remains in guarantee of the payment, for the amount established in the contract. Which means that if they give it to you, you can use your car, but the invoice will be kept by the company that granted you the credit and will deliver it to you until you finish paying it. Another issue is that you are obliged to take out insurance.

If you do not have a credit history due to your age, your parents can be your guarantees. Photo: Pixabay.

Before you apply for an auto loan, ask yourself these questions:

Do you need your car urgently or can the application for your credit wait? How much is it going to cost you? Can you afford it?

If when you ask yourself the first question you think that it is not the time for you to apply for the loan for your car, you can continue saving and leave your credit for later, this will benefit you, because you can count on a larger amount for the down payment of your car and That way, it will decrease, perhaps significantly, the amount you have to pay each month.

Before applying for the credit for your car you must have enough money to cover the down payment, which can be 20% of the value of the vehicle, although they can ask you up to 10%, this will depend on the brand, if you present your application at an agency , or the bank, but also your credit history.

Then you must determine the term in which you want or can pay the amount of the credit and the amount that you must cover in each monthly payment. There are auto loans that range from 6 months to five years. By increasing the number of monthly payments, the amount you must pay each month decreases, but the more monthly payments you have to pay off your credit, the cost of your car will be higher.

You should also know the fixed interest rate that they offer you, it can go from 9% to 29% if the credit is granted by a bank

In the case of auto dealers, some brands offer plans for auto loans for months without interest, but they ask for a higher down payment, around 35%.

It is very important that you take into account the Total Annual Cost or CAT, a percentage that shows the annual cost of the credit. It includes commissions, interest rates, insurance premiums, guarantees and other costs.

It may be that the bank that grants you the credit for your car or the automotive agency ask you for a commission for opening, this is for the procedures that must be carried out in order for you to obtain the credit. It is common for it to be covered by the agency and those that charge it may offer you other benefits, such as lower rates or even bonuses.

The requirements to be given a car loan are:

Valid official identification, passport or card. Proof of residence no more than three months old. Proof of income. The signed credit application. Independent professionals, who do not have payroll receipts, can process their credit by presenting their bank statements.There are cases, in the automotive agencies, that do not request proof of income, then the down payment and the interest rate are increased . Individuals with business activity are asked for the RFC.

Auto credit is safe to get if you have a good credit history. They can even get you approved in a few hours.

If you have a bad credit history, you can also have credit for your car, but the agencies in some way penalize that, because they ask for a higher down payment and raise their interest rates.

Even if you do not have a credit history, they can grant you your credit with the intervention of guarantees. This happens in the case of young people. Some companies accept that parents or guardians act as credit guarantors.

But what about how old you must be to apply for your car loan? Some brands offer these credits to people up to 75 years old.

More information in our Credits Section.