In our lives, we often need financial help, don’t we? Whether it’s to be able to enjoy that holiday season with a long- scheduled trip, invest in a new business or entrepreneurship and even for debt settlement. Finally, there are just a few reasons why we are looking for loan modalities available in financial institutions.
However, most loans offer disadvantageous repayment terms, and it is difficult to meet the requirements for credit release. But not all is sadness: Car refinancing may be the solution for you.This type of credit offers a large amount of borrowed money, without the need for further approval regarding your name and income or high interest payments. It is ideal for those who already own a vehicle and need a nice loan to touch their life. Want to know more about this type of credit? Continue reading…
What is car refinancing?
Basically, this type of credit requires that a car, already settled and on behalf of the customer, be used in the negotiation. That is, you offer your car to the bank as collateral and you may be entitled to a loan of up to 70% of the market value of the vehicle in question. As an example: If you own a car worth $ 100,000, you can borrow up to $ 70,000 from the financial institution. Of course, the car remains under its domain and use.
Who can make this type of loan?
Anyone, as long as he is over 18 years old, has a paid car in his name and is regularized before the collection agencies. Eventually, some banks and credit institutions make it possible for negatives and alienated vehicles to fit into the loan, making car refinancing possible for these people as well.
Can I choose the amount I want to borrow?
Yes, it is possible as long as two aspects are met:
- A loan value of up to 70% of the market value of the car placed as collateral;
- Amount of loan installment may not commit more than 35% of monthly income.
To make it clear, let’s look at an example. Luiz owns a vehicle worth $ 50,000 and needs $ 35,000 to invest in his business. As the loan amount he needs is within the 70% offered by the bank, it will be possible to borrow the amount so far. However, Luiz has an income of $ 5,000 and the installments commit more than 35% of his monthly income, making impossible the loan he wanted at the beginning. So, Luiz chooses to borrow only $ 20,000, fitting in all aspects.
Why are interest rates lower?
As the customer is pledging a car, a valuable asset, and a collateral, the bank expects default and late payments to be much lower than those found in conventional non-performing loans. o have warranties. So, as the bank’s intention is not to borrow your car, interest rates are lower, as the default rate is also lower.