Car in installments: all the nuances of buying

For many people, the thing they want to acquire at the beginning of their independent life is a car. Not everyone can afford to buy a good car. A car is a necessary means of transportation, especially if it is used to move to a place of work and with frequent business trips. For those people who do not have enough money to purchase a vehicle, the car will be an installment option. In fact, this procedure is a loan without interest for the purchase of a specific model of the car.

A bit of history

For the first time, an interest-free loan for the purchase of a car was started in the early 1980s. During this period, one of the major American automakers decided to sell their goods, providing preferential payment terms for their customers. If a person did not have enough money to buy a vehicle, he was offered the opportunity to deposit part of the money at once, and the rest of the amount was distributed for a certain number of months. This method was constantly improved, and soon the company became very popular among competitors, and in the world they began talking about the first interest-free loan for the purchase of a car - the opportunity to purchase a car on installments.

The bottom line was that the auto company paid the missing part of the money for the buyer on its own, but then transferred it to the bank. The banking institution bought out the debt not immediately and not the entire amount, but at a discount. Initially, the buyer had to deposit at least 30% for the car. The amount of the entry fee could vary, it depended on the period for which the installment was provided.

In our country, the opportunity to buy a new car in installments appeared recently.

Differences in installments and credit

Credit and installments to buy a car, in essence, are pretty similar concepts. This is in any case, lending money to buy a car, but if you look into it, they have some differences:

1. Timing. The loan is issued for a long period, the most common loan agreement lasting 5-10 years, while the contract for the sale of the car on an installment plan is usually for a year, or even for several months.
2. The interest rate on car loans is generally 15-20%. It can be concluded from advertisements that installments are issued as interest-free loans, but buyers should be aware that there is essentially zero interest rate, when concluding this agreement, it is very close to zero, but it is not. Bank employees say that with an installment plan, the rate is 0.5% or 1%.
3. An initial fee. When buying a car on credit, it can be less than 10% of the value of the goods. Sale of cars in installments is carried out with an initial contribution of at least 20-30%, and in most cases 50% of the total cost.

Purchase of goods in installments involves the payment of a large sum at once, and the remaining debt is paid in installments, and the entire debt must be repaid in a year or two maximum.

Who has the right to contract

A new car in installments is purchased by individuals who can be clients of banks and conclude contracts on their own behalf. When buying goods in the showroom and not paying the whole amount of the car cost, some of the money is extinguished at the expense of the company, but all the debt is transferred to the bank with which the dealer signed the contract.

In any case, the buyer must be capable and adult. In this case, the age limit is calculated taking into account the number of years the buyer will be at the time of payment of the last part of the debt. So, at the time of the transaction, a citizen should be no older than 64 years with an installment agreement for one year and not older than 63 years - two.

Basic documents required to conclude a transaction

In order to purchase a car in installments, it is necessary to submit a package of documents to the employees of the showroom. It is much smaller than when making a loan, and consists of the following securities:

• Application for an opportunity to pay in installments.
• A copy of the passport of a Russian citizen who wishes to purchase a vehicle.
• Copy of the driver's license of the buyer.

Documents that confirm the buyer's solvency, such as a copy of the employment record or income statement, are not required when concluding this agreement.

Underwater rocks

Everyone who has decided to make a purchase without having the principal amount of the value of the vehicle must understand that the consequences of default on debt repayment can be serious, up to the withdrawal of the car. Buy a car in installments without interest can only be a citizen who has a stable income.

The buyer should understand that he can pay off the debt only for a year or two. It is impossible to avoid making payments. When concluding an installment agreement, a schedule for making payments is made. If a person who is a buyer of a vehicle can not make a payment, then he is not only liable for accrual of late fees, but also for retraining in a new loan. Most often, under the terms of an installment agreement, there is an item according to which, if a part of the payment is delayed, at least a car loan agreement with a rate of at least 15% is automatically executed for at least a day.

How to determine the terms of installments

If the buyer does not have enough money to realize his dream, he can buy a car in installments. The contract is signed with the representatives of the car dealership, in which the vehicle is on sale. Conditions largely depend on the agreement of the management of the salon with the banking institution, as well as on how much the auto show is ready to pay the bank for providing this opportunity to its customers.

Since an interest-free loan, in fact, does not exist, the buyer must understand that at least half a percent, but the auto salon pays out to the financial institution on its own. There are also conditions that the buyer must fulfill for the conclusion of the above contract. The presence of insurance is compulsory. Installment, in its essence, is the product of three organizations: a car dealership, a banking institution and an insurance company.

Under the terms of favorable conditions, a certain model of the vehicle is usually covered, which the dealer of the company chooses independently. Then the bank enters into the "game", with which the partner has developed partnership relations. The banking institution pays for a particular model at a discount, and in the installment agreement with the buyer the full cost of the goods is indicated. That difference between the total cost of the car and the value at a discount and is the real income of the bank for this transaction.

Most often when buying a car requires insurance, which will cost 2-3% more to the buyer of the car by installments.

Additional expenses

When signing an interest-free loan agreement when buying a car, you need to issue an insurance policy. The main insurance companies of cars in Russia are CASCO and OSAGO. The amounts that will need to be paid depend on various factors: from the make and model of the car and the year of production. High premiums are defined for expensive luxury cars, as well as for sports cars.

In addition to the cost of insurance, the car by installments will require additional costs for processing bank accounts for making payments. It is spending in the amount of 10 to 20 thousand rubles for opening a bank account and making a card.

Buying a used car in installments

According to experts, the vehicle immediately after leaving the cabin loses 20% of its full value, and in a few years - half the amount. There is nothing unnatural in the desire of a person to buy a used car. The opportunity to purchase bu cars in installments provides many banks, as well as the sellers themselves of used vehicles. Banking establishments set age limits for machines, physical buyers provide this opportunity regardless of the year of manufacture of the car. Installment bank provides in those cases if the age of a domestic car - no more than 5 years, and a foreign one - no more than 10.

Cars with mileage in installments are acquired through the conclusion of a contract of sale with a note "installment." When registering a transaction, it is necessary to indicate the real price of the goods, so that in case of problems with payments, you do not have to lose money.

Is it affordable to install?

Acquisition of a car on an interest-free loan or in installments is beneficial only for those people who have a stable good income and pay the right amount on time. Anyone who has delayed the payment of a debt can get into a hopeless bondage.

In addition to risk, installments have only positive aspects: the procedure for concluding a contract is simplified, it is necessary to file a minimum of documents for consideration of the application, the payment period is small, early repayment of the debt is permitted.

Lending with a special grace period

Legislation provides for a program through which you can buy a car in installments with a so-called grace period. It operates when opening an account with the possibility of using a plastic card. From the buyer of the car during the period specified by the contract, interest on the loan is not charged. In addition, you can make any amount, even if they are significantly higher than those indicated in the payment schedule.

Typically, such a grace period lasts one year, and if the buyer pays the full amount of the value of the car during this time, it actually turns out that he bought the car on installments.