To finance the acquisition of a car, you have the choice between the car loan, a restricted loan, and the personal loan. The choice is however difficult since both of these formulas have advantages and disadvantages.
Auto Credit: Enjoy the Security of an Affected Loan
Classic car credit is a restricted loan. This means that the loan is intended only for the purchase of a vehicle. This type of loan has major advantages. The act of purchase and the credit contract are linked together. If the purchase is unsuccessful, the credit is automatically canceled at no cost. The credit is also canceled in the event of termination of the sales contract. The assigned loan thus provides a more secure framework for the borrower. It does not support a credit whose object disappears. On the other hand, the other advantage of the affected loan lies in its price. A restricted loan has significantly lower rates.
Personal loan: benefit from the flexibility of a credit without proof
The majority of credits without supporting documents are taken out in the form of a personal loan. It is an unrestricted loan. The borrower alone decides how to use the funds he receives from the bank. In our context, he can use it to pay for the purchase of a car. But nothing prevents him from changing his plans. He can notably use all or part of the money to buy household equipment, to pay his late invoices. He freely decides on the allocation without risking prosecution for credit embezzlement. On the other hand, a personal loan is easier to take out than a restricted loan. The personal loan is more accessible.
Car loan vs personal loan: a significant rate differential
One of the criteria, certainly one of the most important, concerns the cost of credit. If the loan affected involves more important steps, it still displays the most attractive rates. The rate differential between a restricted loan and a personal loan can reach 2%. With a credit spread over 4 or 5 years, this differential constitutes several thousand $. From this point of view, auto credit largely wins the battle.
Lesasing: another alternative to restricted credit and personal loan
But the choice is not limited to these two types of credit. Other loan formulas are emerging to compete with them. This is the case with leasing, a credit formula based on rental sales. It consists for the buyer in acquiring a vehicle for monthly rents. The contract may provide for a simple rental or a rental with option to purchase. In the first case, the vehicle is returned at the end of the contract. In the second case, the buyer can acquire the vehicle in person upon payment of a cash payment. In both cases, the rents included additional services including vehicle insurance, maintenance, possibly repairs.