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Wilmington Trust How much does Car loan without down payment Which is better What to do
Wilmington Trust How much does Car loan without down payment Which is better What to do
Corporate & Institutional

Which is better, a car loan or a consumer loan for a car?

When buying a vehicle, many are faced with a shortage of funds. In this case, a bank loan may be a good solution.

The main differences between consumer and car loans

Consumer loans and car loans are completely different banking products. To profitably buy a vehicle, you must understand the differences between the first and second. Only then you will find out what is best to take - a consumer loan or a car loan.

Banks issue a consumer loan for the purchase of durable goods. Anything can be such a product: furniture, appliances and even a car.

A loan can be targeted and non-targeted. Target involves the allocation of funds for specific needs - for example, for the purchase of equipment. Purpose funds cannot be used for something else, say, furniture. You can take a targeted consumer loan to buy a car.

There is a fundamental difference in how car loans differ from consumer loans.

Strengths of a car loan:

Minimum interest rates. Due to targeted financing, the bank offers customers rates that in most Russian banks do not exceed 17–20% per annum. The consumer loan rate is usually 5–7% higher.

Down payment is 0-50%. If it is higher, the interest rate on the balance of the amount is reduced as much as possible.

If you participate in the state program, the question of which loan is more profitable - a car loan or a consumer loan, disappears. To participate in the state program, which involves a 10-25% discount on the cost of the car, it is necessary to take a car loan. In 2020, the discount will be 25% of the cost of the vehicle for the Far Eastern region and 10% for the rest of the regions.

Banks offer preferential car loan programs. These programs can be either an independent initiative of a financial institution, or the result of cooperation with salons. You can find out how best to buy a car on credit at any bank. Making a loan on favorable terms is also possible.

Christophe Schroeder
Christophe Schroeder
Senior Vice President
+44 (0)20 7397 3628
Email Christophe