Buying a used car with financing is a solution that can be interesting for people who need to change their car but don't want to spend all their money on a new vehicle. Indeed, it is possible to buy a used car with financing, which allows you to reduce the amount you have to pay. However, this solution is not without risk and it is necessary to take some precautions before launching out. Let's take a closer look.
What is a used car with financing?
A used car with financingA lease is an offer that allows a customer to benefit from a new or recent vehicle in exchange for the payment of monthly instalments fixed in advance. It can be taken out directly or through a specialized company. A new car with financing is often offered by car dealerships.
When a customer buys a new car, he/she has to pay the price of the car and the amount of interest and other costs related to its purchase in cash for a certain period of time. Once this term is over, the customer has nothing more to pay as long as the vehicle is not resold or damaged. Also called "LOA" (Lease with option to buy), it allows the consumer to rent a vehicle for a long period (minimum 3 months) in order to have the necessary time to study the different possibilities of reselling the vehicle before the end of the contract. This type of rental can be done directly with the car dealer or through a specialized company such as Carventura, a subsidiary of the Avis Budget France group, which offers financial services (car insurance).
It is also possible that your bank proposes this type of offer: it is then called "car leasing".
The monthly payments vary between 120 ? and 300 ? per month for a period of between 24 and 60 months depending on the models chosen and the options requested (maintenance, extended warranty, etc.).
Why choose a used car with financing?
It is no secret that the price of vehicles is constantly increasing. However, there is a solution to reduce your car budget: opt for the purchase of a used car with financing. Indeed, the majority of dealerships offer this type of financing which can be taken out in store as well as on the Internet. Why choose this option? By choosing the purchase of a car with financing among the offers proposed by your dealer, you benefit from a more attractive rate and can also take advantage of the 14-day withdrawal period present at certain dealerships (for more information on this period, see our article on this subject).
You are free to change the amount of the monthly payments and the duration of the credit according to your needs! You can also change the model you wish to purchase during the course of the contract. This type of financing allows for great flexibility in the monthly payments, which can be increased or decreased depending on your monthly cash flow.
It is important to compare the different possibilities before making any commitment. Advantages and disadvantages of car leasing When you opt for a traditional credit, you have to pay the full amount of the vehicle price right away without being able to benefit immediately from the advantages offered by long-term leasing (LLD).
What are the advantages and disadvantages of choosing a used car with financing?
For those who do not want to commit to buying a new car, it is possible to choose a used car with financing. This type of transaction has advantages and disadvantages that are important to know.
The benefits of financing for the purchase of a used car.
The main advantage of a financing for the purchase of a used car is the cost. Indeed, you can finance your vehicle in an optimal way by calling upon a traditional car credit like an affected car credit or a revolving credit. This allows you to considerably lower the price of the vehicle compared to the list price displayed on certain brands. In addition, the repayment period can be extended compared to the one that could have been obtained by using only the own funds of the person concerned.
It is important to know that this type of operation often implies additional costs such as the costs related to the bank and to the insurance associated with the car loan but also the costs related to the compulsory technical control every 2 years (approximately 100 ?). To reduce the overall cost of financing, it is therefore necessary to carefully study your budget and your needs in order to choose the right model for your current and future financial situation.
What are the risks associated with buying a used car with financing?
Buying a car with financing is a choice that can be quite risky. Indeed, if you decide to finance your vehicle through a car loan, the financial company will be entitled to charge a higher interest rate than the one normally offered for this type of credit. In addition, if you are unable to repay your loan because the monthly payments far exceed the consumer's financial capacity, it is possible that the financial organization will demand immediate payment of the total balance of the loan. If this is the case, previous debts incurred for the purchase of the vehicle will automatically be cancelled. However, if you are making monthly payments on your loan and these payments are less than the original loan amount or term, there is no need to worry.
You will not have to pay interest on the missing payments since they were included in the original loan and therefore do not represent an additional debt to the financial institution.
What should I know before choosing a used car with financing?
A used car with financing is a way to get a car without having to pay the full price. However, it is important to know that it is a credit that can be interesting because of the low interest rates and the current market conditions.
It should not be forgotten that there are several types of credits in France.
The different types of credits are the following ones: The personal loan, the affected loan, the revolving loan, the permanent credit and the credit affected to the purchase of a car. Once you know which type of loan suits you best, you can make a request on the internet to obtain a free quote without obligation. Why choose a used car with financing? A number of people choose this method of acquiring a car because they do not have the financial possibilities to buy a new car at the right time or because they want to take advantage of the current low interest rates that make this type of formula possible. You should know that when you buy your new vehicle, the payments are made over a maximum of 36 months, whereas when you lease with the option to purchase (LOA), the payments are not made over 36 months but rather over a maximum of 48 months.
Where to find a used car with financing?
When we talk about a used car, we immediately think of a vehicle in poor condition. This is often the case, but there are tricks to acquire a used car car with financing and does not have these disadvantages. Buying a used car with financing can be more interesting than buying a new car. In this case, how to proceed? Here are the different solutions to buy your used car with financing: 1) The classic car loan: This is the most common type of credit for the purchase of a used car. This solution is often the least expensive and it allows you to finance your vehicle directly without going through the resale of another vehicle or a personal contribution.
The amount of the classic car loan is between 3,000 and 75,000 euros and varies according to the model chosen, the estimated annual mileage, additional equipment (baby seat, etc.), etc.
The maximum repayment period is generally between 12 and 60 months depending on the amount borrowed. 2) Leasing: Leasing consists of financing the purchase of a single model by renting it for a long period (generally between 36 and 48 months). With this solution, the acquisition of the vehicle is not definitive since the contract stipulates that the customer can terminate the contract at any time after having paid the additional expenses such as the financial expenses or the annual tax on the redhibitory defects.
Why not? There are many people who finance their used cars. This is not a bad idea, on the contrary, it allows you to drive in a new vehicle while paying less than in a dealership or at an agent. However, there are a few things to keep in mind: