Car loans: how to choose the right one for you?

Car loans are the most beloved loans by Italians.

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This was revealed by a recent Assofin survey (May 2018): 34% of loans granted in 2017 were requested for the purchase of a used car (18%) or a new car (16%).

If more than one in three loans are asked for the purchase of a car, you need to ask yourself what are the cheapest car loans . A good part of the answer can be obtained by focusing on the main characteristics that distinguish a personal loan from a finalized loan.

The first step to do if you want to buy a car with a loan, in fact, is the choice between a bank loan or a loan . If you do not know the difference between personal loan and finalized loan , you can learn it in two minutes by reading this article , which you will need to better understand the following.


The bank loan and its advantages

The bank loan for the car is a personal loan granted by the credit institution. With the money obtained from the bank you can proceed to purchase the car by paying immediately the full cost at the dealer.

What are the main advantages?

  • If you pay the full cost of the car right away, you can sometimes get a discount.
  • If you get a discount and you make money from the loan that the bank has granted you can freely use the difference for other purposes without having to give an account to anyone.
  • If the car is used and therefore the cost is not too high, you immediately take the thought of having to pay the installments set by the dealership which, of course, are higher than the cost of the car.
  • If the dealership offers a financial with very high rates ( in particular it controls the APR and not just the TAN! ), The bank loan can save you money.


The financial and its advantages

The financial proposal proposed by the concessionaire is a finalized loan . It is a loan granted directly at the time of purchase of the car that has been particularly successful in the last years of economic crisis due to the difficulty in obtaining money from the banks.

What are the benefits?

  • There are no down payments or maxi installments.
  • Financial formulas are often flexible.
  • In the case of installments which, if added together, exceed the amount of the car, you can however obtain insurance or additional services at an advantageous price.
  • Often after three years you can return the car and refinance the purchase of a new vehicle.



Leasing: a third opportunity

A third chance if you want to buy a car is to resort to a car lease . It is a solution halfway between car rental and buying and selling . In this case you will pay an initial installment (even if today often those who propose the car leasing do it without advance) and then a monthly fee.

What are the benefits?

  • The monthly fee also covers maintenance and insurance.
  • If you change cars often, you will not have to worry about the devaluation.
  • The redemption of the car is a decision that is up to you.
  • If you buy a leased company car, you can deduct the monthly installments for the principal amount of the company balance sheet.

The transfer of the fifth: an extra option

Buying cars by assignment of the fifth salary is an extra opportunity that opens up for public and private employees and pensioners. The formula for the transfer of the fifth ( find out all the details here ) is simple: one month will be withheld from the paycheck or pension a fifth of the amount.

What are the benefits?

  • The monthly payment is sustainable, being 20% ​​of your salary or pension.
  • If you are a bad payer or a protestant, this possibility is granted to you


The zero rate: what does this mean?

Another important thing to know if you want to buy cars and you have to resort to a loan is what means the “zero rate” formula that is underlined in many commercials. The zero rate refers to the TAN (nominal annual rate) , ie the pure interest rate that is applied to the loan received each year.

This means that the TAN of the auto loan does not include ancillary costs and collection costs ( so remember to look at the APR too! ). The zero-interest loan is often offered together with the “theft and fire” insurance policy for the entire duration of the loan.