Sunday, 21 Apr 2024

Loan : Benefits for the customer

What does this mean for the customer? The borrower can freely change the car to a newer one every 3 years without involving more cash and, what is more, retain the right to a much lower monthly installment commitment. 

It is enough that at the end of the loan period, he notifies the company of his will to resell the car he has used so far – the funds obtained in this way will automatically affect the repayment of the last installment and own contribution for the next car.

However, financial benefits are not everything. By changing the car every 3 years, the customer is provided with the manufacturer’s warranty support for the entire duration of the  car title loan agreement. In such a model, the borrower does not have to worry about the amount of the last installment at all.

The last installment does not always equal half the price of the car

The amount of the last installment mainly depends on the lender’s policy (and, of course, the value of the car), and the main factor influencing its value is the loan period – the longer it is, the dealer will propose a lower purchase value. It is related to the market impairment of the car.

Car purchase for cash

In some companies, the balloon installment amounting to 50 percent. car value is available in lending for 2-3 years. With each subsequent year, the permissible installment amount decreases proportionally. In one of the companies, with a 5-year contract, the lender will not agree to a balloon larger than 10 percent. vehicle value.

Other ways to finance your car

The analysis of the research results shows unequivocally that loans with balloon installments are much more attractive in terms of the amount of monthly installments the differences reach almost PLN 1,000 per month. Only three institutions presented us in the surveys with offers for loans with buy-back installments Bank, and PSA Consumer Finance. 

Bank boasts the lowest installment in the list – by choosing this form of car financing in a showroom, the customer undertakes to pay installments of PLN 869.65 for the first 35 months. In other companies, one should take into account the budget burden of over PLN 1,000 per month. 

At Getin Bank, the installment amounts to PLN 1,021.54 / month, with this offer being one month longer, because the redemption takes place only in the 37th month of the contract. In the PSA Consumer Finance balloon loan, the installment for 35 months will be PLN 1183.55, and the last installment will account for 35 percent. the initial value of the car.

The cheapest standard cash loan for the purchase of a car is already a burden on the household budget by almost PLN 500 / month – FCA-Group Bank Polska would charge PLN 1,643.55 a month from model customers. The most expensive offer in terms of the installment amount is associated with monthly costs of PLN 1,873.85 / month.

When looking for a car financing that will be less burdensome for the household budget, it is worth considering the balloon installment loan model. The monthly repayment costs of such a loan will be up to several dozen percent lower than a traditional cash loan, and the customer with a lower installment receives a continuous warranty from the car manufacturer and a new car model straight from the showroom every 3-4 years.