Take out a loan online, without ever having a financial advisor in front of you, it’s possible, but if you don’t compare the different offers, you may very well find yourself repaying a loan at 17 or 18% interest while a credit at 4 or 5% held out your arms!
1st tip: Clearly identify the reason for your request.
Indeed the interest rates applied are different depending on the purchase they finance. The interest rates for the purchase of a vehicle are lower than those intended to finance work in your home, which itself is cheaper than a revolving loan.
So that you can get a clear idea, we offer two examples of credits, for the purchase of a used vehicle, in these two examples the amount borrowed is the same: 6000 USD. And the repayment tenure is 48 months.
Example n ° 1: For a “second-hand vehicle loan ” contracted with a credit company, (the rates vary between 10 and 11%), the monthly payment would in our example be around 154 USD.
Example n ° 2: But with a revolving credit also contracted with a credit company, (the rates vary between 14 and 16%), the monthly payment would be around 167 USD
- If you are creditworthy, these two loans could be granted to you for the purchase of a used car. As part of a “car loan” of course. But also for a revolving credit since for this type of loan no proof is required.
- If you are not careful and you go on revolving credit, you will pay 48 X 13 USD = 624 USD more than with a car loan !!! Which still represents the “trifle” of more than 10% of the amount of the loan, it’s huge!
2nd tip: Compare the offers, perform online simulations.
- We advise you first to make an appointment with your bank advisor, by email or by making an appointment with an agency, so that he can make you a proposal.
- Then perform online simulations (all credit companies offers e n line simulator). (Cofidis, cofinoga, cetelem, Finaref, Sofinco, Financo etc…)
- You can also carry out simulations on the websites of major banks (Société Générale, Crédit Mutuel, Caisse d’épargne, BNP Paribas, Crédit Agricole, Crédit Lyonnais, etc.). But be aware that it is very possible that the bank that you have chosen will ask you to direct your accounts with them!
- Please note : During your simulations, always enter the same amount to borrow and the same repayment period, the comparison will be easier!
For example, a car loan in a large bank while keeping the parameters of examples 1 and 2 above (6000 USD / 48 months) would correspond to a monthly payment of around 140 USD.
3rd tip: Negotiate!
Certainly it is difficult to negotiate with online credit companies. but you can try it with your own banker. Indeed if during your simulations, you find an offer more interesting than that of your bank. submit it to your advisor and ask him to make an effort. Agency managers have a certain amount of leeway over the interest on loans.
4th tip: Avoid revolving credits as much as possible.
This type of credit, also called revolving credit or reconstitutable credit is a sum of money that is made available to you. The system is very flexible and the sums are released very quickly. But the rates are very very high. It is this type of credit that drives unsuspecting households into over-indebtedness.
- To be used only as a last resort.
- With parsimony.
- By repaying it as quickly as possible.
Throughout this article, we have used the example of a “car loan”. but be aware that the procedure and the instructions for use are the same for all types of loan (personal loan, motorcycle loan, work loan, home equipment, etc.).