A car is different for everyone: a handy tool, comfort at shopping, or a long-cherished dream to name just a few. Using it will save you a lot of time and energy, so it’s no coincidence that sooner or later life will come when the need for your own vehicle arises. The supply is huge, so everyone can find the one that suits their needs the most. Many of our customers are looking for younger used cars and changing their vehicles every few years. For this purpose, they are usually sacrificed from a few hundred thousand forints to several million forints, which in many cases can be solved by a favorable car loan.
The most important features of the car loan
Already at the beginning of the article, it is worth disputing a misconception: what we know today as a car loan in public language is actually a personal loan for free use that you can use to buy a car. Demand for traditional car loans that were previously known was more complicated, as it also required cover and equity. Nowadays, personal loan is the best choice for financing a car loan, as it can be easily and quickly applied compared to other loans. Here are the most important features:
- no need for self-financing, you can finance up to 100 percent of your car’s price on credit
- there is no need for a car or real estate cover to buy a car for credit
- You can apply for a loan amount of 100 thousand forints to 10 million forints
- up to 96 months
- Fixed interest rate, so you can calculate the installment
- no matter whether you are moving a new or used car to the amount you require
- it is not more expensive than leasing, and the car is in your ownership
- You can also use the loan amount to cover other transaction costs
The process of applying for a loan when purchasing a vehicle
If you have already decided to buy a car and you make a loan for it, you need to be aware of the following conditions to start a claim:
- you need to reach the minimum age required to apply for a loan – typically 18 years, but banks can set a higher age or require co-claim
- you must verify at least 3 months of reported employment, and it is also important not to be on probation and no notice
- banks may set a different amount for the minimum expected net income: there is a minimum wage, but you may need more to claim
- it is a very important condition not to appear on the Central Credit Information System (KHR) negative debtor list.
It is worth collecting the documents you need in advance. As an employee to apply for a personal loan to buy a car, these will be the required documents:
- valid Hungarian identity card or passport or driving license
- home address card with permanent address in Hungary
- up to 30 days employer income certificate
- last 3-6 month bank statement showing you get regular income
- previous month’s utility bills and phone bill with payment certificate, for your own name and address
If you are an entrepreneur, you will need additional documents:
- business license
- Income Statement for the latest full closed business year issued by NAV (some banks ask for two years)
- a declaration from NAV on proof of non-payment
- public utility invoice certificates
You will need the following documents as a pensioner:
- identity card, driving license or passport
- Notification of the Pension Fund Directorate in the current year or retirement statement (not older than 12 months) or pensioner certificate
- last name paid utility bill and phone bill
If you meet all the conditions and have the necessary documents, the process of requesting can begin:
- As a first step, you need to contact the creditor bank. You can do this here, either on the Auto Family site, by phone, or you can go in person to the bank branch of your choice. Applying for a personal loan is more convenient and quicker for a personal loan application, and you can do it with several banks, including CIB and OTP.
- The bank carries out a creditworthiness test to see how much you will be able to pay for your income and expenses. Check to see if you are in the KHR and the risk that you will not be able to pay the installment properly. This test can take up to a few minutes (but it can take a couple of days) to quickly determine if you are eligible for the amount of credit you need.
- If the creditworthiness test is positive, the bank will make an offer for you that you can accept by signing the contract.
- After only a few minutes after signing the contract, but within a maximum of 1 business day, you may have the required credit on your account, from which you can pay for your dream car.
When applying for a loan, remember to take into account that if you buy a used car, you will also have administrative tasks after buying a car, such as the cost of transcription, compulsory insurance and authenticity. Your car purchase and other expenses also depend on whether you buy a new or used car or whether you buy the vehicle from a car dealer or an individual.
Choose the best deal! This is how the car loan calculator works
With a car loan calculator you can save long hours by looking at the opportunities offered by the market in one place without having to stand out from the armchair. With a few clicks, you can set up the right parameters for you and prioritize your bank offerings. When choosing a loan, you should set the calculator according to your needs. You can sort the bids in the order of the APR based on the full rate of interest or the total repayable fee for the loans. If you want to decide on the amount of the installment, you have the option to change the settings with just a few clicks.
Let’s look at a practical example: if you need a $ 2 million loan to buy the car you are looking for and the cheapest solution, Raiffeisen Bank repays a total of $ 2,768,424 with a repayment of 72 months for a 72-month maturity, and a monthly installment 38,017 forints.
You can get a much better offer if your net monthly income exceeds 250,000 forints and you pay your salary to the selected bank: in this case, besides the 8.27 percent THM, K&H’s outstanding personal loan can be a good solution. With a repayment of 72 months, you pay back a total of HUF 2,522,880, and the monthly installment is HUF 34,571.
The calculator displays the best deals in the bid list. The maximum APR shall not exceed the value of the central bank base rate increased by 24 percentage points. The maximum APR since May 25, 2016 is 24.9 percent.
Are you thinking about car loan? Use our Car Loan Calculator boldly and choose the best deal for you! It’s worth checking out and spending time looking for the best deal, as you can save up to hundreds of thousands of forints by choosing a favorable design.
Car: Credit or Lease? What is the difference?
Closed-End Financial Leasing is the other major form of financing that you can use when financing a car alongside a personal loan. The most important information about leasing:
- like a personal loan, you pay the owner the monthly price in monthly installments
- Leasing can typically be your own 20-30 percent equity
- may require the car to be covered as collateral
- the age of the vehicle counts: after a certain journey, it is no longer possible to lease a vehicle
- leasing the car will not be your property, you will only be the maintainer
- you have to keep the costs of the maintenance, for example, it may be compulsory. casco insurance for cars
- After the expiration date, you can decide whether you will return the car or pay the residual value and use it again, now with your own property.
It can be seen that the car loan is more flexible and faster than the leasing, as there is no need for self-financing or cover. However, leasing can be an advantage over a personal loan that does not mean you have an unconditional commitment. In previous years, leasing was a good choice because the transaction interest rate was very favorable compared to the personal loan. Nowadays, however, personal loans also have a lower interest rate of up to 8-10 percent, which shifts the balance on the personal loan to the decision.
Benefits of a well-chosen car loan
Don’t worry about time and energy for choosing the best loan for you, as a good financial decision will always pay off. In the calculations included in the calculator, you can see that there may be as many as hundreds of thousands of forint differences between the total loan amounts for loans with the same maturity.
Advertisements promoting low-interest loans may be tempting, but you are better off comparing bids on the basis of the APR rather than the interest rate, as it includes over-the-counter costs.
In the case of car loans, it is also worthwhile to follow the current actions, as banks are trying to attract customers with different discounts. For example, you may get a discount if you apply for a loan online if you have a high net income or if you receive your payment on a current account with a creditor bank.
It is worth considering the length of the term before the election, as it will affect the monthly installment. The shorter the term you need to borrow, the higher your repayment will be, but you will also have to pay less interest. If, however, you already see that you will be able to spend less on a monthly basis, it is advisable to extend the loan with a longer term. In this case, the amount of interest payable will be higher, but you can settle the monthly repayment more safely. When you take your monthly expenses into account, remember to keep in mind the cost of maintaining your future car!
You should consider all of these features carefully and consider using the car loan calculator to find the best deal. What we advise you is to be as careful as choosing your car as you choose your car so that driving is truly an experience!