Here we will present some of the conditions that are most often applicable when you are borrowing for a car. Now, however, it is important to remember that not all conditions are addressed here and that there are also general levels that we raise. Therefore, it may vary from one lender to another. One thing to note is that here we list terms for real car loans where the car is the collateral for the loan.
There are lenders who offer car loans but where it is really a form of private loan, these terms differ a bit and we do not address them here.
Who can borrow – As for all loans, there are some basic requirements that the borrower must fulfill in order to borrow. For example, you must be at least 18 years old (sometimes even older), normally free of payment remarks. In order to pass the usual credit check that is done when you apply for the loan, you must also have an annual income that often must be above USD 140,000.
Requirements for the car – Since the car will be the collateral for the loan, the bank will make some demands on the car that you will buy. It may not be older than 12 years after you have repaid the entire loan. Exceptions can be found but then it must probably be a car of great value (for example, if you were to buy an old and expensive Ferrari or similar). Furthermore, the car must usually be fully insured during the entire loan period.
The credit period is usually a maximum of 8 years.
The Seller – In order to take a car loan with the vehicle as collateral, it is generally required that the car you buy is sold by an authorized dealer. If you want to buy a car privately you can often not get a car loan, but then it is a private loan that usually applies to you. It should be said that there are some lenders who have appeared that offer purchases via private individuals. Then, however, the car should be valued etc. by a knowledgeable person before there is a possibility of loan. Another loan option is if you can take out a loan with something else as collateral as a house for example.
Cash contribution – A car loan is usually only a maximum of 80% of the total purchase price of the car. This means that you have to fix 20% of the price in a cash deposit. If you exchange a car you can for example get this amount or you may already have that amount in cash. If you need a loan for these 20% instead, this is probably a private loan that suits you best.
Loan amount – The lowest loan amount you can apply for when it comes to car loans usually eats somewhere between USD 40,000 – 50,000. The maximum loan amount can easily be over USD 700,000, if you buy a regular car, then there is no problem with the maximum amount.
Security – It is the car you buy that will stand as collateral for your loan. This means that if you are unable to repay the loan to the bank, they may claim the car as payment for the loan.