What is a car loan?
A car loan is a type of cash loan that is intended for a specific purpose (purpose loan), namely to finance the purchase of a vehicle. The concept of the vehicle covers not only passenger cars, but also trucks, motorcycles, mopeds, scooters, quads, caravans or motor boats. Loan repayment security is purchased vehicle, and thanks to this form of security interest on car loans are usually lower than in the case of cash loans.
This type of loan is granted for the purchase of a new car, used or imported from abroad.
Where to take credit for a car?
The market for new and used cars is very wide, so there are banks that cooperate with car manufacturers and dealers. Some car brands have their own banks that provide loans for the purchase of individual brands. For example, Toyota Bank finances Toyota cars, and Volkswagen Bank grants loans for the purchase of Volkswagen, Audi, Skoda and Seat. Apart from its brand, Doat Bank also supports loans for the purchase of vehicles of other brands – new and used. So, if we buy a new car in installments, usually a dealer’s loan offer awaits us at the dealer’s salon and the seller will carry out the entire procedure with the minimum involvement of the buyer.
Bankate Consumer Bank and GE Money Bank work closely with dealers and car dealers, and a car loan is one of their core financial products. The offer of car and car dealerships often includes two or more loan proposals, where the formalities are maximally simplified and most of them can be settled on-site without going to the bank’s outlet.
The loan repayment period and installment amount
Loans for new vehicles are granted for a maximum period of up to 8 years, which mainly depends on the preferences of banks. It is logical that by spreading the loan repayment for a longer period, we will be able to buy a more expensive car, but the sum of the interest paid will be much higher. The general rule is that banks are more willing to provide loans for the purchase of new vehicles, while the purchase of a used car is associated with higher interest rates and a shorter lending period.
The amount of the car loan installment ranges from a few hundred to even several hundred thousand zlotys and depends only on the creditworthiness. The maximum car loan amount may reach several hundred thousand zlotys, and if the borrower’s income is high enough, no bank will refuse to borrow money.
Paying your own contribution is actually the standard for car loans. A chance for a loan without the own contribution of our mother in a few cases, when the car is new and the amount credited is low. Own payment is usually lower than 30% of the value of the vehicle.
Documents required to obtain a car loan
The type and number of documents necessary to obtain a car loan by individuals depends on the form of obtaining income. Two documents are always required (ID card, driver’s license, passport) and certificate and obtained income (employer’s certificate, last episode of retirement, decision on granting a pension or – in the case of persons running a business – certificates of non-enrollment with ZUS and US.
In addition to the documents concerning the borrower, documents related to the vehicle will also be needed (purchase invoice or purchase / sale agreement, photocopy of the registration document and vehicle card, certificate of no entry in the pledge register, confirmation of vehicle insurance).
Car loan collateral
The method of securing a car loan is one of the factors that affect the relatively low interest rates on this type of loan. Although setting up a car with a pledge securing the repayment of the loan does not limit the possibility of using the vehicle, it, however, makes it impossible to sell it without the bank’s consent. Before using the loan, it is worth checking what type of security will be established. Below, we describe the collateral used by banks.
Registered pledge. This is the most burdensome form of securing a car loan, which consists in making an entry in a special register. The registered pledge prevents the sale and re-registration of the vehicle and the formalities after repayment of the loan are payable and quite cumbersome.
Full or partial transfer. It involves the borrower transferring the ownership of the vehicle to the bank, which is automatically transferred back after full repayment of the loan. Corrigendum is less troublesome, because after paying off the loan there is no need to delete the vehicle from the register of pledges, it is only necessary to re-register the car.
The vehicle card deposit in the bank. Lack of access to the vehicle card effectively prevents the sale of the loan object and is the most convenient solution from the borrower’s point of view, because it does not require any additional fees or actions, such as deleting from the register of pledges or re-registering.
The above forms of security are supplemented with the assignment from the autocasco policy, which provides compensation to the bank in the event of theft or destruction of the vehicle.