It is in fact a loan that is granted to the motorist to be able to buy the car in installments and which must be repaid over a certain period of time through monthly installments , in different ways that can be customized according to the customer’s needs. Granting a loan for the purchase of a car is a very common strategy in the car world and is adopted by dealers in order to expand their market and embrace a wider clientele in-house car financing assistance singapore.

The car loan can only be granted by authorized financial institutions such as banks, independent financial companies and the financial companies of the car manufacturers, which in fact are all banks authorized to operate.

How new car financing works

More and more car manufacturers own an affiliated or owned credit institution . In this way, the loan agreement is stipulated directly between the buyer and the car manufacturer , which will propose various parameters and formulas to facilitate the payment of the car.

The car loan is then structured according to an articulated scheme that provides for the payment of an advance to be agreed (which can also be canceled), installments to be paid each month for a predetermined period (usually from three to six years) to which they are applied a determined interest rate based on the capital disbursed, and possibly a maximum final installment with which the buyer pays in a single solution what is left to be paid. The latter can also be refinanced .

In recent years, the formula of the maxi installment or “balloon” is becoming very fashionable as it is associated with the Guaranteed Future Value of the vehicle at the end of the period (for example three years) where the customer can choose whether:

Return the car,

pay the remaining part (usually close to 50%) or get on a new car (of the same brand) with a comparable monthly payment.

In this way, the consumer drives a new car every year without worrying about second-hand management or increasing maintenance costs.

It is meant for those who use their personal car moderately or a lot , it is not suitable for those who keep their car for 10 years with low mileage.

Legal guarantees on financing

An option guaranteed by the law is that of the early repayment of the car loan which allows the buyer to pay the entire loan before the deadline agreed in the contract (usually after the first year there are no penalties to pay for the early termination).