Soliciting a car loan without contributions means choosing monthly payments that will not have a big impact on the borrower’s budget. Most vehicles are financed through a loan, which is sometimes associated with a personal contribution.
Whether integral or partial, the contribution offers the loan applicant the opportunity to obtain a financing solution that is ideally suited to his situation. It is however possible to subscribe to a car loan without contribution.
Why make a loan to acquire a vehicle?
Many households finance the acquisition of their vehicle through car loans. As for the reasons for this choice, they are diverse and varied. For example, we quote:
- the fact that the acquisition of a vehicle can symbolize a significant investment. The latter varies between 2,000 and 3,000 USD for a used car, and more than 10,000 USD for a new vehicle. Although for the first, it is quite possible to finance the acquisition cash, for the second case and according to your profile, it is essential to use a car loan.
- Those who own a cash but want to preserve it for another use. This is a very good approach when it comes to funding another, more expensive project.
Indeed, in this type of situation, the fact of not resorting to the loan can generate a notorious gain.
Why buy a car without input?
The auto loan without contribution is a regularly chosen solution for the financing of a vehicle. This solution is inevitable when one does not have own funds. It involves using a loan to finance the entire purchase of his vehicle.
This inevitably entails a much higher cost of the loan. In this case, it is often advisable to extend the term of the loan, in order to reduce the monthly payments.
The interest rate will however be higher than in the case of a short-term loan with larger monthly payments. To choose the right formula, it is advisable to pre-make a loan simulation online.
This will allow you to better choose the duration of the loan, the desired capital and the cost of monthly payments. In any case, please choose a method of financing that will not hurt your budget too much.
Indeed, it is not uncommon to negotiate a car loan without contribution over 60 to 84 months when the monthly budget to allocate to the acquisition of the vehicle is relatively low.
Is it advantageous to apply for a car loan without any contribution?
It should first be recalled that it is possible for the borrower to apply for a car loan without personal contribution. However, this is an advantageous solution depending on the socio-economic situation of the loan applicant. The entire amount will be borrowed from a bank or credit institution.
However, we can not deny that bringing a few thousand or a few hundred USD as a personal contribution is also very advantageous. This allows the credit applicant to benefit from more favorable borrowing conditions by negotiating a lower interest rate. It also reduces the duration of the auto loan.
The conditions to benefit from a car loan without contribution
As mentioned above, obtaining a loan is not conditioned by a personal contribution. Only the duration or cost of your monthly payments will be impacted. Without contributions, your deadlines will be either staggered over a longer period, or higher.
Anyway your advisor will take care of checking your ability to repay your car loan according to the charges you already assume (monthly bills, rent, etc.) and your living remains monthly.
For some insurance, you can easily benefit from a car loan. For example, a stable job is mentioned. In addition, your credit organization will be more inclined to grant you financing if you have a good seniority in your company or if you are on a permanent contract. The lending institution will also look at your financial situation and your debt capacity.
Debt capacity, a crucial point in obtaining your loan
It is important to remember that the statutory debt ratio is 33%. This is also a limit not to exceed! So remember to focus on a reasonable offer or product, appropriate to your means and your needs. It is therefore essential to pay close attention to your debt capacity, in order to:
- do not risk a refusal;
- do not find yourself unable to repay the monthly loan payments.
In short, it is possible to benefit from a car loan without personal contribution. However, this type of loan has the disadvantage of having either higher monthly payments or a longer repayment period. In addition, you have a little less opportunity to negotiate your rate. Remember to compare offers and products to make your choice.