Financing a car is a dream for many people. But it is essential to understand the subject well before taking the risk. Do you understand what you should know before financing a vehicle?

Today we are going to explain to you the most important information you should know before taking out a loan. That's because, like any financial decision, planning is necessary. 

Therefore, continue reading and see these 6 questions to answer before realizing the dream of owning a car. Check out!

First, it is essential that you understand how vehicle financing works. That's because it's a little different from a loan, for example. In addition to having some specificities related to car documentation, etc.

Therefore, with financing, you make a proposal to the bank for the good you want to acquire. After that, the bank can offer you a value exactly equal to that of the good. Remembering that this depends on the credit analysis.

But in the case of the car, the money you pay goes directly to the seller, not the bank. In this way, it is very common for people who still do not have the full value of a car to opt for financing. 

Also, it's interesting that you already have an entry value available. Because this can reduce the amount needed to be financed and, consequently, the installments and interest will be lower.

Therefore, see below some questions that can help you to know what to do before financing a vehicle.

First, consider your need for a car. For example, does the city you live in have good urban mobility? Is it possible to get around only with public transport?

We know that in Brazil this is not a reality. However, sometimes, in smaller cities, it is possible to move around without a car. 

Also, also think about your locomotion to work, for example. If you would spend a lot more time and money if it were cars? These are all questions to consider.

Together, it is essential to think about the expense that a car brings. When people think about financing a vehicle, it is common for them to think only of the purchase price. However, keeping a car in the garage is a constant expense.

For example, also calculate the expense with monthly gasoline, maintenance, IPVA and other fees. All of this adds a recurring expense to the car that can weigh on your family budget.

Another considerable expense is insurance. In this sense, car insurance is increasingly expensive. In addition to also considering the expense of regular cleaning of your car and revisions.

In addition, another important issue is the model of car you are going to choose. Think about whether you live in an urban or rural area and where you will use the car most often, for example, to choose a model with the highest possible cost-effectiveness.

At first, banks do not carry out financing for those who are negative. Therefore, assess your financial context. Even if it's not negative, do you have a good bank record to get a vehicle loan?

In addition, it is also worth researching which institutions you would get funding for. For example, if you are already an account holder at a bank, it is common for you to get better offers.

In addition, it is important to know the types of financing. That way, you can choose the best option more clearly.

In short, one of the main issues is to understand well how the financing conditions work. That is, if you are really going to be able to afford those installments and deadline.

In this sense, there are some types of financing. Check out:

Basically, with the CDC, the client must request financing from the institution. That way, during the financing process, the good is already in the buyer's name. That is, the car will already be yours.

But that car is alienated to the bank. That is, if you do not pay the installments, the institution can take that asset back. Incidentally, it is important to be aware that with the CDC, interest increases over time.

Therefore, many people end up taking out this financing and selling the car in the middle of the process.

With Leasing, the buyer performs a kind of rent with the seller. That is, you pay the monthly installments but the car is not yet in your name. As such, it still belongs to the original seller.

It is a good option for those who change cars frequently. Because the documents are only generated at the end. In this sense, you don't have to pay documentation fees several times in a row.

Basically, interest rates are a key part and it is very important to pay attention. Mainly, because in some financing modalities, interest can rise over time.

Therefore, when you hire your financing, be very aware of these rates. One tip is to hire financing from an institution that you already maintain a certain relationship with. 

That way, the bank already knows your financial habits and understands whether or not it can trust you.

Also, be very aware of abusive fees. For example, there are some fees that institutions charge, but which by law, you can refuse. They are the Credit Opening Tariff (TAC), the Boleto Issuance Tariff (TEB) and the Carnet Issuance Tariff (TEC).

Finally, pay close attention to the Total Effective Transaction Cost or the CET. Because it is from it that you can see what amount you will pay in the end. That is, how much interest or, then, the term you will be able to pay.

So now you understand what you should know before financing a vehicle. That way, you can fulfill your dream of buying your own car in a safe and responsible way. 

Now, if you want to understand even more, in this other article we explain how the vehicle financing calculation works. Access and understand.