Expert Rusanova Irina: Which is better – a cash loan or a car loan

If you want to buy a car on credit, there are two options that borrowers usually consider – to issue a targeted car loan or a simple cash loan. In practice, it all depends on the situation and on whether a new car will be bought or a loan.

25 August 2020

If you want to buy a car on credit, there are two options that borrowers usually consider – to issue a targeted car loan or a simple cash loan. In practice, it all depends on the situation and on whether a new car will be bought or a loan.

If you plan to buy a new car

When planning to buy a new car from the salon, it makes sense to consider a car loan. Many banks that issue targeted car loans enter into partnership agreements with salons and manufacturers. As a result, excellent credit conditions become available, the rates will be much lower.

For example, consider the partnership offers of Rosbank. So, Kia cars can be bought on credit at 11.3-12.3%, Lada – 13.3%, Mazda – 4.9-9.9%, Land Rover – 5.9-7.5%. For comparison, a cash loan in the same bank is issued at a rate of 13.9-22.9%. When applying for a targeted car loan, the car remains pledged, which reduces the risks of the bank, therefore the rate for such programs is lower. – Expert of Brobank.ru service Irina Rusanova.

But there are two important points to consider:

  • the bank is entitled to require the issuance of a CASCO policy for the entire loan period, and the lender himself will be the beneficiary. It is clear that the policy is bought at the expense of the borrower, and this is not a cheap pleasure;
  • a down payment is required. And the larger it is, the lower the rate for the program. The minimum bar is 10%, the optimal one for the best rate is 30%;
  • the car will remain pledged. The buyer disposes of it, but will not be able to sell – the documents for the car will be kept in the bank until the car loan is repaid in full.
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What is more profitable when buying a new car is up to you for a specific brand and situation. You will have to pay for CASCO, but, in the meantime, in any case, you will have to issue OSAGO. There are brands that can be bought for 2-5%, in this case a car loan will definitely be better.

If you are planning to buy a used car

Some banks are developing special car loan programs for buying a used car from an individual or a car dealership. In the case of a car dealership, a bank representative can work on its territory, who will arrange a targeted loan on site – this is convenient.

For example, VTB Bank has developed a car loan for used cars that you can buy from anyone. It can be a car no older than 4 years for a domestic manufacturer and no older than 10 for a foreign one. The rate for a standard borrower is 13% per annum. A cash loan in the same bank is issued at a rate of 13.2-18.9% per annum. But, again, with a car loan, you will have to buy CASCO. – Irina Rusanova.

In general, you need to make calculations. For example, if the client is salary, he may be offered favorable terms for a cash loan.

When is it better to choose a cash loan
Car loan programs are more profitable in terms of overpayment, even when it comes to buying a used car in a showroom or from an individual. But in some situations, it will be more optimal to choose a cash loan:

  • no money for a down payment;
  • categorical reluctance to spend money on a comprehensive insurance policy;
  • buying a car that does not meet the bank’s requirements;
  • a favorable offer from a salary or other bank;
  • not satisfied with leaving the car as a pledge for the loan repayment period.
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When applying for a cash loan, you get cash and are free to choose any car you like. Plus, you can spend part of the money on the car, and leave part for other purposes, for example, for the purchase of components. The most important thing is that the car will not be encumbered, it can be sold at any time.



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