It is personal loan with vehicle warranty: in this option, a vehicle is placed in guarantee in case you do not pay the installments on time.
As the bank is sure to receive your payment (in the worst case it wins your vehicle), you will get very low interest rates.
The idea is always the same: if the bank does not see much risk to get the money back, it can charge very low interest rates.
And that name ” consolidation ” makes perfect sense: after all, it’s as if you’re paying back the installments of your car.
If you do not pay, your automobile is auctioned (usually at a much lower price than if you decided to sell it). So, only use this option if you are sure that you will be able to repay the debt. Otherwise, consider selling your car.
Generally, the banks release values of 60 to 70% of the sale value of the car. That is, you can achieve a much higher value than in traditional personal loans, depending on the value of your vehicle.
This, however, can give the false sense that you are full of money. Soon, this type of loan should be very well thought out: What are you going to use that money for? Already have a project well thought out for him?
Low interest: well below the average for personal loans (which are around 130% per annum). In some institutions you can get up to 18% per year.
Highest Values: generally up to 60% of the value of the vehicle
Elongated Deadlines: Payment can reach up to 5 years
The vehicle remains yours (unless you delay the parcels)
* Date of December 2016
If you do not pay the loan on time, you lose the vehicle : the bank sells your car to pay off the debt (and often for a much lower amount than if you decided to sell it yourself).
It involves higher costs than a traditional loan : valuation, broker, IOF, insurance … all this can be embedded in the financing or paid right after the loan is released, depends on the bank.
Be careful not to be trapped: know beforehand what the money will do for you! Paying more expensive debts? Invest in a new business? Find out where the money will go out and how it will get back in to pay the installments.
Credit can change your life for the better: and that depends on your planning.
Remove the vehicle to be consolidated
Most banks do not approve the loan when the car is not cleared. There are two possible solutions. The first option is to seek banks that accept this debt and refinance alienated cars. In that case, part of the consolidation money will take away the vehicle and the rest will be with you. (Be careful and see if this option will not have high interest rates). The second option is to refinance the vehicle before consolidation it, especially if you are near the end of the financing.
Also, try to regularize the documentation of the vehicle and, of course, its documentation. The vehicle must be in your name.
The financial institution will evaluate the value of your vehicle. consolidation usually frees up to 60% of the value of your vehicle and allows you to commit up to a maximum of 30% of your income repaying the installments. The year of manufacture of the vehicle counts a lot! Vehicles made over ten years ago are not usually consolidated, but the bank may charge for this assessment anyway.
In addition to the required documentation cited below, it is important to know that banks prefer the vehicle removed and require it to be in the name of who is applying for consolidation. Usually the requested documents are:
- RG and CPF
- Proof of marriage, for those who are married
- Proof of income
- Proof of address
- National Driver’s License
- Vehicle Registration Certificate