Como contratar um crédito automóvel?

How to hire a car credit?

An auto loan is a personal financing with the specific purpose of purchasing a vehicle. But how does it work, what requirements are necessary and what should you decide before contracting? We will explain next.

26 Mar 20245 min

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Want to buy a car through car credit? The credit intermediaries at Poupança no Minuto gather several proposals from banks and help you decide on the best conditions for you. Find out how this credit works.

What is an auto loan?  

Want to hire an automobile loan? You can proceed if it's a new or used car, meeting the requirements requested by the banks.

By hiring this type of financing, the financial entity obtains a property reservation/mortgage on the property.

This is a personal loan specifically for automobile purposes and is one of the easiest to contract, being able to obtain 100% financing with terms up to 120 months (10 years).

The conditions will depend on the proposals presented, according to the amount of financing needed, the financing term chosen, as well as the year of the car, and the interest applied to the credit. Therefore, you should always request several simulations from different banks, to compare and have the most suitable proposal for you!  

What are the requirements to access an auto loan?  

In order to access this credit, have the financing approved with better conditions, banks assess your effort rate and risk profile.  

The effort rate is calculated based on your monthly income versus the monthly credit installments you have contracted, to understand the impact another installment will have on your budget. This is how the bank analyzes if you have the financial capacity to support another monthly burden.

The ideal effort rate, according to the Bank of Portugal (BdP), should be up to 35%, with the following formula for calculation:  

[Total installments / Household income] x 100 = Total percentage    

In other words, if you have a contracted home loan and pay 400 euros monthly for it, receiving a net monthly income of 1,600 euros, your effort rate will be 25%. Therefore, if you add a monthly car loan payment of 150 euros, your effort rate will be 34%, being able to get approved for a loan.

But the client's risk profile is also analyzed, through checking for any defaults and financial history at BdP, age, client's income, and also their employment status. However, please note that each bank analyzes proposals on a case-by-case basis and approval criteria are variable.

In addition, it should be noted that car loans may have different conditions depending on whether the car is new or used. This is because if it is a used car, the conditions may be slightly worse. For example, for a financing of 5,000 euros with a repayment term of 24 months, for a new car you may have an APR of 9.4% and a monthly installment of 224.50 euros, and for a used car an APR of 9.9% and a monthly installment of 225.57 euros. In other words, although these are illustrative data, as it will always depend on specific cases and banks, a loan for a used car will always be, in principle, more expensive.

What to define before hiring the car loan?

Before moving forward with hiring car credit, you must define some aspects that will impact the conditions proposed by financial institutions. URL: [link](URL)

For example, decide whether you want to make a down payment on the loan or if you want to finance 100%. The more capital you make available initially and the lower the loan amount, the less you will pay monthly for the financing.

Then, find out what is the financing term you want to access. If you prefer the maximum term, the monthly installments will be more diluted and you will pay less per month, but you will end up paying more interest in the long run, increasing the total value of the credit.  

You must also decide if you want the credit with a fixed or variable interest rate regime. Just like in mortgage credit, if you choose the variable rate, it is indexed to Euribor and subject to its fluctuations. Therefore, if the Euribor rates go up or down, depending on the term you defined, when your installment is reviewed, the same will happen to the amount of the monthly payment (go up or down).  

Although the fixed rate may be higher, it offers the same value throughout the contract, ensuring greater stability and predictability.

Furthermore, be aware that interest rates may be higher for buying a used car than for buying a new car.

Finally, you also need to know that when hiring a car loan, the car is in the name of the customer, but with automobile property reserve in favor of the financial entity (in the property registration title, the customer remains the owner). This is so the bank can protect itself, since in case of default, the financial entity can take the car, which was used as collateral. In order to avoid this, you will have to hire a personal loan without a specific purpose - but with higher interest rates. 

Talk to a credit intermediary from Poupança no Minuto to contract your car loan: We provide a free mediation service, handling all communication with banks, bureaucracies, and helping you choose the credit simulation that makes the most sense for you!  

According to your needs and preferences, intermediaries find the conditions you are looking for, guiding you throughout the process, until the money is available in your account!  

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