Market credit offers aim to respond increasingly satisfactorily to consumer needs. But also to their repayment capacities. This results in a multitude of possibilities in terms of ideal monthly payments for a car loan.
Regarding the car loan, the amount and number of monthly payments to be made by the borrower closely depend on the type of loan, its duration, the interest rate, and the amount of the personal contribution.
Monthly payments adapted to each goal
Even though the duration of a car loan varies from one to seven years, the ideal number of monthly payments is between 24 and 60 months, with few exceptions.
Most of the time, a self-employed worker seeks to buy a car that they can use both for their professional activities and for personal use. Banks take this usage and the self-employed person’s situation into account in their credit offer to adapt it best to the borrower’s repayment possibilities.
The peculiarity of self-employed individuals is that they have rather variable incomes, so it will be necessary to aim for an average number of monthly payments and take this change into account when calculating income. It is important to remember that as a self-employed person, you can benefit from tax deductions for the purchase and use of a car for your professional travel.
On the other hand, an individual who wishes to buy a car through a bank loan can rely on stable and predictable income. The number of adapted monthly payments will depend on the actual repayment capacity. You can use our online credit simulator, which will help you make the right choice. The loan duration often varies between 12 and 84 months, and even up to 120 months for some models costing more than 37,000 euros.
It should be noted that if the vehicle benefits from a warranty of more than five years, it may be wiser to extend the repayment duration to lighten the amount of the monthly payments.
The type of loan can vary the monthly payments
The number of monthly payments also depends on the type of loan.
It is, for example, entirely possible not to borrow the entire price of the vehicle. This is what specialists call a “loan with residual value.” Consequently, part of the car is not financed, often equivalent to 30 or 50% of it. The main advantage of this method is to offer lower monthly payments. However, it is only interesting if you plan to resell or amortize your vehicle after four or five years of use. Indeed, at the end of the loan contract, you must pay the residual value to the credit institution.
Classic auto financing is a formula that allows you to acquire the entire value of the vehicle through a loan. No personal funds are required, although having a small nest egg generally helps reduce the number of monthly payments.
Before any subscription, it is recommended to estimate the amount of your income, subtract annual expenses, and calculate your possibilities in terms of monthly payments. When you get the result, try to evaluate if the obtained amount is sufficient, over a repayment period of 2 to 5 years, to acquire the desired vehicle. This will avoid any disappointment.
Type of car and ideal monthly payments for a car loan
First of all, the price of a new vehicle is significantly higher than that of a used one. Furthermore, credit institutions in Belgium take into account the age of the car in their credit offer. This is why the APR for a loan to acquire a new car is more favorable than for a used one. A high-priced car often requires a longer loan duration, which reduces the interest rate. Banks require guarantees to offer long-term financing. If you plan to repay your loan for more than five years, the bank may require additional guarantees to offset the depreciation of the vehicle over time.
Finally, in terms of auto loans, each case is unique. To avoid endless calculations and quickly benefit from the best credit advice, do not hesitate to contact our specialized brokers. A detailed analysis will be carried out to offer you the most suitable solutions for your situation and perfectly meeting your needs.
