Get a car loan with bad credit
Auto credit is consumer credit. It can be subscribed to any financial institution, be it a bank, a company specializing in credit, or a financial subsidiary of a car manufacturer. By granting the car loan with bad credit, the financial institution makes available to the consumer the funds, so that he can buy the vehicle whether new or used.
Consumer credit is a credit allowing its user to finance the acquisition of a good or a service, excluding real estate. By subscribing to consumer credit, the person agrees to repay a loan repayable the amount of which can not be less than 200 $, nor exceed 75000 $.
The repayment period must be greater than 3 months. Indeed, the ASF, the French Association of Financial Companies has identified 4 types of consumer credit. These types of credits include restricted credit, revolving or revolving credit, personal loan and lease with an option to purchase. The consumer can acquire his auto credit with each of these different types of credit.
Consumer credits have been the subject of several laws. Successive legislation aimed at increasing consumer protection. This is to avoid the risk of over-indebtedness for individuals, and bad debts that would taint the balance sheets of financial institutions. Thus, all institutions offering consumer credit must respect the regulations in force. In particular, the European Parliament and Council Directive 2008/48 / EC of 23 April. To be applied in France, this directive was published in the official journal on July 2, 2010.
The automotive industry in a few figures
In 1990, the number of vehicles produced in the world reached 50 million. After peaking at 74 million units produced in 2007. The financial crisis has created a drastic drop in the number of vehicles produced. This financial crisis that began in the United States in 2007 had a direct impact on the automotive sector. Specifically, in 2009, the number of vehicles produced was only about 62 million.
The two major causes of this crisis have been the increase in the Fed’s interest rates, which must be added to the decrease in the value of the household real estate. The financial crisis has affected the entire global economy, creating a wave of defaults, a drop in household consumption and business investment, a decrease in consumer credit and consequently credit self, leading to growth in unemployment, recession …
Leaving the financial sphere to contaminate the real economy, the crisis hit all sectors of the economy hard. Whether it’s the financial sector, real estate, or the automotive sector. The negative impact of the subprime crisis on the production and financing of automobiles explains the decline in outstanding auto loans observed in 2008. With the end of the crisis and economic recovery, the automotive sector has recovered color. As a result, in 2013, the number of vehicles produced in the world was 87 million units.
In recent years, low-interest rates combined with a drop in the price of oil have led to the auto sector. If in 2008, the average price of oil per barrel was around $ 100, this year, the price per barrel fluctuates around $ 50. Lower interest rates have reduced the cost of car loans.
The use of car loans
In France, the purchase of a vehicle is the main reason why households acquire consumer credit. Nowadays, consumers who do not want to buy a vehicle with, for one reason or another, have several auto credit options.
The solvent consumer can determine the solution that suits him best depending on his current and future personal situation, the price of the vehicle, his relationship with his banker. Then contact several financial organizations to find the option best suited to his situation.
At the end of 2012, according to the credit observatory, nearly 27% of French households had consumer credit.
In France, nearly 3 out of 4 new vehicles are acquired through a car loan. But when it comes to financing used cars, only one used car in two is bought with a car loan. This is of course due to the fact that new vehicles are more expensive than used cars.
Often the consumer subscribing to a car loan
only finances part of the price of its acquisition with the credit. For, statistically, the amount of credit subscribed for the purchase of a vehicle represents only 73% of the purchase price of the vehicle. But the higher the age of the consumer, the lower the share borrowed to finance the vehicle.
Thus, in general, the French have a contribution to finance their vehicles. The average duration of the car loan is four and a half years in France.
To finance their used vehicles, the French prefer the personal loan. With the advent of electric vehicles, new modes of financing are favored. Indeed, it is financing based on rental financial formulas related to the use of the battery.
The subscription of the car loan
In general, the consumer subscribes to his car loan at the place of purchase of his vehicle, so half of the car credits are subscribed at the point of sale of the vehicle. The rest of the auto credits are subscribed to banks or credit organizations. Regardless of where the car loan is taken out, car credit professionals must comply with the current legislation on consumer credit.
Therefore, to protect consumers who want to obtain consumer credit, the legislator has put in place a whole series of obligations for the lending institution. First, it is up to the institution issuing the car loan to ensure the solvency of the borrower. This includes, in particular, a check to make in the file grouping all the payment incidents. In France, this file is called the FICP, the national file of the Incidents of reimbursement of Credits to Individuals. It is administered by the Bank of France.
All individuals who have filed an over-indebtedness file, or who have defaulted in the repayment of their credits, are registered.
In order for the financial institution to insert the name of a person in this file, the debtor must have been in default for at least 60 days.