What is Vehicle Finance?
It is a type of loan intended for the purchase of a vehicle, which serves not only for the purchase of cars, but also for the purchase of motorbikes. Financing becomes a possibility for people who wish to acquire this type of automotive good, but often do not have the amount to buy in cash. Therefore, it is a good option, according to the reality that each one lives.
Which vehicles can be financed?
Currently, the main vehicles available for financing are car and motorbike. However, there are modalities for the purchase of trucks, which are less popular.
There is no difference between financing for cars and financing for motorbikes. The difference is in the asset. Motorbikes tend to be cheaper than a car, so they have a more accessible value at the time of financing and approval.
What types of funding exist?
In the Brazilian market, there are two options. They are Direct Consumer Credit (CDC) and Leasing. See below what the differences are:
- Direct Consumer Credit: CDC is a type of secured financing. This means that the asset purchased is held in the name of the client with fiduciary alienation. In other words, it means that when financing a vehicle in this type of modality, the creditor (financial institution) keeps the asset as collateral until the entire debt is paid off.
- Leasing: Leasing financing, on the other hand, is a type of leasing with the option to acquire the good. In this modality, the vehicle does not belong to the consumer, since it stays in the bank’s name until it is paid off for a minimum period of 24 months.
What about the amortisation in the financing?
The amortization is nothing more than the advance payment of some installments at the time of acquisition of an asset. It is used to reduce the total time of the contract and gradually reduce the value of a debt. To amortize, there are two types of modality: the Price Table and the SAC.
- Price Table: Quite common in vehicle financing. The Price Table calculates the interest so that the value of the instalment is fixed. Because it is fixed, the installments are usually lower.
- SAC Table: Amortization modality that starts with higher and lower installments in the end. The value of the installment goes down, from the first to the last, because there is a progressive decrease of interest.
What about the Consortium?
The Consortium is a modality of acquisition of goods that is often confused with financing. Here, we explain how a “consórcio” of vehicles works.
What documents are required to finance a vehicle?
- RG (Identity card), original and copy;
- CPF (Cadastro de Pessoa Física – Natural Persons Registry), original and copy;
- Proof of marital status, original and copy;
- Proof of income (pay stubs or bank statements), original and copy.
What happens if I stop paying the loan instalments?
This is a question that may arise, after all, nobody knows what tomorrow will bring. But this type of risk is provided for in the contract and will depend on the type of financing you have chosen. In the CDC, the financial institution will file a lawsuit to remove the car from your property. In this case, the car or motorbike will be auctioned to pay off your debt and court costs. If after these procedures, there is any money left, it returns to you. In the case of Leasing financing, the company will file a lawsuit to remove the vehicle from you. However, unlike in the CDC, you do not get your money back.
Financing Fines
In case of delay or installment fine, there are some amounts to be paid to the institution that financed the vehicle. But, rest assured, this is a measure that happens in the delay of any account. Therefore, be aware of abusive rates and always observe if:
- The fine paid cannot be greater than 2% of the total debt.
- Interest per month of delay cannot exceed 1% of the total debt.
Finally, always try to renegotiate the financing debt so that you do not run the risk of losing your car or motorbike.
How to choose the best type of financing?
The best type of financing is the one that fits in your pocket. Always analyze how your life is, the stability of your job and especially how much you can pay in installments on the car or motorbike financing. At this moment, you need to thoroughly investigate the impact that a vehicle financing can make in your life.
What is the interest rate on vehicle financing?
This rate will depend on the financial institution that you are going to finance the car or motorbike. That’s why it’s so important to do a lot of research on the rate with each institution that offers this type of service and also to avoid the obvious. Look for safe and truthful financial institutions to perform this type of transaction.
Is it worth financing a vehicle?
Financing is done through financial institutions, whether private or public. The installment amounts depend exclusively on your income. So, you negotiate the installment amount according to your salary or other type of passive income you have. As long as you can prove it, you can negotiate a higher amount with fewer instalments or a lower amount that may take longer to repay. FinanceOne’s Vehicle Finance calculator helps you make your decision.
Hiring used car finance: is it worth it?
To answer this question it is necessary to analyse very well the type of vehicle you want. After all, analyzing from an economic point of view, it is not very good to finance already used vehicles. This is because new car usually has better conditions for financing, since there is a tabulated value and in these cases the interest rates may be lower. Used vehicles need to go through a more detailed evaluation, including documentally, to check if there are no restrictions that prevent them from serving as collateral. Above all, the probability of a used vehicle having problems and causing inconvenience is much higher than when buying a brand new vehicle. But, if by looking at the model and comparing it to newer vehicles, you consider that it is the ideal one for you and that the transaction will be advantageous, go ahead and finance the vehicle!
Where to assess vehicle financing?
As previously stated, it is necessary to make a good search before closing with the first vehicle financing that accepts your request. Although it may seem small, at the end of the financing the difference can be quite big. Among the most suitable financial institutions for financing are:
- Cars: Itaú, Santander, Caixa and Banco do Brasil.
- Motorbikes: Honda and Yamaha.
Is it possible to finance a car with a bad name?
Yes, it is possible. But this is not an easy option, much less a cheap one, since being in default means that you probably did not pay off a debt. There are financial institutions that approve car and motorbike financing for people with negative credit ratingsBut it certainly won’t be an affordable option.
What about vehicles with no down payment?
Yes, it is possible to finance vehicles with no down payment. However, this is a privilege for only a few. To be able to finance a vehicle with no down payment, you need to prove a high score, which is the confirmation that you have paid all your bills. Besides the high score, you also need to demonstrate that you have an income compatible with the value of the car to be financed.
How to transfer a vehicle financing?
This is a procedure that requires a lot of attention, after all, it involves several people and institutions. Therefore, to remove this doubt in a complete way, see how to transfer the car loan to another person.
