How does a car loan work exactly? And what do you need for it? You will undoubtedly have a lot of questions when you want a loan for a new or used car. In this blog we will go into the most frequently asked questions.
What is a car loan?
We shouldn’t worry about this: a car loan is a form of credit to finance your purchase of a new or second-hand car. You can purchase that car from an official dealer, but also from a private individual.
How does a car loan work?
In principle it looks like an ordinary personal loan. For example, you borrow from the bank an agreed amount that you must repay monthly at a certain interest. But there are still some differences between a regular personal loan and a car loan:
- It is possible that the purchased car serves as collateral for the personal loan. Do you sell the car during the term of the loan? Then you still have to pay the remaining amount.
- When determining the term of the loan, the bank often takes into account the expected economic life of the car.
What are the differences between borrowing for a second-hand car and a new car?
In principle, this is the same loan. Perhaps the only difference is the cost of the credit on an annual basis. This cost is usually lower for new cars than for a second-hand car.
What do you need to take out a car loan?
If you plan to take out a car loan, you usually need to provide the following documents:
- A quotation or order form with all information about the desired car. Just think of the precise type and year of construction.
- Your identity card
- Proof of housing
- An overview of your income and employment
Find a car loan together
With us you will undoubtedly find the best car loan. Because we work as a broker with the most current banks, we have an overview of the car loans that best suit your specific situation.
Let’s sit together for a person-to-person conversation. Our employees are happy to talk about your current financial situation, your expectations and the opportunities that present themselves.