By Elisa
Buying a used car with finance can be an attractive option for people who need a new car but do not want to spend all their money on a new car. Indeed, it is possible to buy a used car with financing, which reduces the amount of money you have to pay. However, this solution is not without risk and some precautions should be taken before taking the plunge. Let's take a closer look.
What is a used car with financing?
A used car with financingA car lease is an offer that allows a customer to benefit from a new or recent vehicle in return for the payment of monthly instalments fixed in advance. It can be taken out directly or through a specialised company. A new car with financing is often offered by car dealerships.
When a customer buys a new car, he or she has to pay cash for the price of the car and the sum of interest and other costs related to its purchase for a fixed term. Once the term is over, the customer has nothing more to pay as long as the vehicle is not resold or damaged. Also known as "LOA" (Lease with an option to buy), it allows the consumer to lease a vehicle over a long period (minimum of 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 specialised 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 offers this type of offer: this is 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 (servicing and maintenance, extended warranty, etc.).
Why choose a used car with financing?
It's no secret that the price of cars is constantly rising. However, there is a solution to reduce your car budget: opt for the purchase of a used car with financing. The majority of dealerships offer this type of financing, which can be taken out in the shop or on the Internet. Why choose this option? By choosing to buy 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 with certain dealers (for more information on this period, consult our article on this subject).
You are free to change the amount of the monthly payments and the duration of the loan 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 great flexibility in the monthly repayments, which can be increased or decreased according to your monthly income.
It is important to compare the various options before making a commitment. Advantages and disadvantages of car leasing If you take out a conventional loan, you have to pay the full price of the vehicle right away, without being able to take advantage of the benefits of long-term leasing (LLD).
What are the advantages and disadvantages of choosing a used car with financing?
For people who do not wish 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 second-hand 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 the price of the vehicle to be considerably lower than the list price of certain brands. In addition, the repayment period can be longer than if you were to use your own funds alone.
It should be noted that this type of operation often involves additional costs such as the costs linked to the bank and insurance associated with the car loan, but also the costs linked to the compulsory technical inspection every 2 years (approximately 100 ?). To reduce the overall cost of financing, it is therefore advisable 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. If you decide to finance your car through a car loan, the finance company will be entitled to charge a higher interest rate than that normally offered for this type of credit. Moreover, if you cannot repay your loan because the monthly payments greatly exceed the consumer's financial capacity, it is possible that the financial organisation 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 instalments as these were included in the original loan and therefore do not represent an additional debt to the financial institution.
What do I need to know before choosing a used car with financing?
A second-hand 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 credit in France.
The different types of credits are the following: 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 is best for you, you can apply online for a free, no obligation quote. 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 means 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 arrangement possible. You should know that when you buy your new car, the payments are made over a maximum of 36 months, whereas when you take out a lease with an option to buy (LOA), the payments are not made over 36 months but rather over a maximum of 48 months.
Where can I find a used car with financing?
When you think of a used car, you immediately think of a vehicle in poor condition. This is often the case, but there are tricks to acquiring a used car. car with financing et qui ne présente pas ces inconvénients. Acheter une voiture d?occasion avec financement peut s’avérer être plus intéressant qu’acheter une voiture neuve. Dans ce cas, comment faire ? Voici les différentes solutions pour acheter votre voiture d?occasion avec financement : 1) Le crédit auto classique : Il s’agit du type de crédit le plus répandu pour l’achat d’une voiture d’occasion. Cette solution est souvent la moins coûteuse et elle permet de financer directement son véhicule sans passer par la revente d?un autre véhicule ou par un apport personnel.
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 over 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 paying the additional costs such as the financial costs or the annual tax on redhibitory defects.
Why not? There are many people who get their used cars financed. This is not a bad idea, on the contrary, it allows you to drive a new car for less than you would pay at a dealership or agent. However, there are a few things to bear in mind:
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