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car loans

The 3 essentials of the best personal loans

If we are thinking of buying a car, choosing the perfect car loan for us is one of the most important parts of the buying process. Compare between different offers instead of staying with the first offer and knowing the most important characteristics that make them – or not – a good offer will be essential to get the best car loan.

1 – The cost of the loan: the most important

The cost of the loan is the most important factor that we must take into account when looking for financing, whatever the purpose. Currently, according to the latest published data from the Bank of Spain, the average APR of consumer loans was 8.91%. Currently, with the great offer of loans to finance cars that are in the market, it is important to look for a credit below the average. Currently, not the cheapest car loan of the moment is the Cofidis Project Credit , which leads the ranking of the best credits to finance a car:

Lender Quantity Cost characteristics I’m interested
Cofidis New Automobile Project Credit € 4,000 – € 15,000 From 5.95% TIN
(6.12% APR)
  • No opening or study fees
  • No linked products
  • It is not necessary to change bank
  • Money in account in 24 hours once the request is accepted
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It is important to look at the APR and not just the TIN since, while the TIN tells us the interest we will pay for the requested car loan, the APR includes, in addition to the interest, other expenses such as commissions or connections.

2 – Car loan commissions

As we have said, the study and opening fees are included in the APR, so if the APR is low, we know that it is a cheap car loan. However, we must bear in mind that these commissions are paid together with the first repayment installment , that is, the first month will involve a greater economic effort.

The APR should always take precedence over other aspects, although if we get a car loan with a low APR and no commissions we will have a better offer.

3 – Connections for financing a car

These are products that the entity requires us to contract to access credit . In the case of car loans, the most common is that they ask us for insurance. There are two types of links: free ones, such as payroll or receipts, and others with costs, such as insurance or a minimum expense with the credit card. The less binding we have, the better because it will save us more paperwork and an additional expense that other credits will not have . The Cofidis project credit, for example, does not have any mandatory binding, although it does have payment protection insurance that we can contract if we wish. In addition, hiring or not this insurance will not affect the cost of credit.

In addition to these three factors that include in the cost of a car loan, we must also take into account the flexibility of the credit, that is, the possibility of extending the term, changing the amount of the installment or increasing the capital of the credit without this supposes too much paperwork or a commission to do it. This flexibility, although we will not always have to use it, gives us a margin to adapt the car loan to our current situation during its life.