Things to note when buying a car on installments

(Baonghean.vn) -For those who have enough financial means, the decision to buy a new car is quite easy. However, if the economy does not allow but you still want to own a "car", the popular way today is to use the form of buying a car on installments.

Buying a car on installments makes it easier for you to own a car, but it comes with a large installment payment and a lot of fees. For those who are planning to buy a car on installments, please note the following points to avoid future problems and ensure your own benefits.

Find out general information

First, car buyers should check the loan advertisements of various banks in general. Loan interest rates, loan terms, mortgage requirements, types of vehicles supported by the loan, fee policies and accompanying insurance…

This is core information that any future car owner needs to be aware of.

Costs and procedures

To avoid being asked to pay brokerage fees by credit officers, buyers should find reputable agents, ask the agent to introduce banks and act as an intermediary to handle the procedures. Thanks to that, customers will have full information about the loan form, know more clearly about the amount they will pay each month and avoid legal problems.

Car purchase procedures usually have 2 main documents: a group of personal documents and a group of financial documents, through which the bank can evaluate and give a loan amount suitable to the buyer's future payment ability. Even if the buyer mortgages other assets such as a house or the purchased car, the installment loan amount is unlikely to exceed 70% of the car's value, the maximum repayment period is usually 5 years (60 months).

Review of personal finances

If you are a person with a relatively good income, a stable job and need to buy a car as a means of transportation, you do not have to worry too much, because the ability to make regular payments every period is something that many lending banks are interested in and even appreciate.

However, in reality, car buyers not only consider the financial aspect but also rely on needs, convenience and even the return on investment factor if any.

Understand loan interest rates

Currently, lending interest rates are often divided by banks into two forms: fixed and based on decreasing balance.

With the fixed interest rate method, the buyer will have a fixed interest rate for the entire loan term calculated on the initial balance. The advantage of this method is that the interest rate is not affected and fluctuated by the bank's adjustment, but it does not benefit if the market interest rate decreases. Therefore, only those with a stable income should choose this form of loan.

With interest calculated on a decreasing balance, the buyer will also have an initial fixed interest rate, but this interest rate will then be adjusted up or down depending on the bank. The advantage of this form is that the interest payable will gradually decrease, as the customer's outstanding debt will decrease more and more. Only people with a stable income should choose this form of loan.

Limit mortgages

Normally, when wanting to own an expensive car, in addition to being able to pay based on main income, car buyers also have to be transparent about other assets such as land, house, savings book and even the car they want to buy.

Borrowers need to prepare well the necessary conditions when borrowing to buy a car, at the same time learn and ask for more advice from the bank they want to borrow money from to get the best loan direction for themselves, minimizing high-risk mortgages.

Be careful with preferential treatment

For those who borrow money to buy a car for the first time, it is easy to be "overwhelmed" by preferential loan programs, possessing many utilities as well as attractive interest rates without anticipating the consequences when they are not able to meet the conditions set by the bank.

There are cases where banks offer loan packages with preferential low interest rates for the first 3 or 6 months. For example, the 3-month period is fluctuating from 5.5% - 5.9%/year, and the 6-month period is from 6.5% - 7%/year... but when the preferential period ends, the interest rate will be calculated based on the base interest rate, usually the average interest rate of the input capital plus a fluctuation margin of 3.5% - 4.3%.

This has caused many borrowers to accidentally pay extra money than they initially intended, due to haste and haste when deciding to choose preferential loans.

Insurance options for car installments

Dealers, banks, and insurance companies often have close relationships with each other, but this is also a factor that causes many problems for people who borrow money to buy cars on installments.

When you buy on installments, banks or agents will usually assign you an insurance company. You can refuse and buy from another insurance company. However, it is best to use the insurance package of the insurance company that the bank recommends, because if there is any accident or damage, the settlement procedure will be simpler and less time-consuming.

Note other fees

In addition to paying for the car and preparing finances to pay off the debt periodically, car buyers also have to pay a number of related fees before driving such as property appraisal fees, vehicle registration fees, registration tax, inspection fees, car insurance, insurance fees for bank loans and some other fees depending on the bank's regulations.

In addition, the cost of "feeding" the car is also something that many car owners cannot ignore such as road maintenance fees, maintenance fees, fuel costs depending on the time... not to mention that periodic debt payments to the bank can be late and prolonged, leading to car owners having to pay fines or incur additional fees related to the loan.

Compare and make decisions

All the necessary factors related to car loans at banks are mentioned above, but many car buyers are still confused about which bank is more beneficial or which interest rate is better. However, no matter what decision is made, the condition that never changes is the ability to repay the loan periodically and the actual need for use that any borrower needs to pay attention to before intending to buy a car on installment.

Ngoc Anh

(Synthetic)