When we want to buy a car, we often do not have all the necessary money and have to finance part of it. Pledge loans are specific for these operations and have the characteristic that they constitute a pledge on the vehicle, which becomes the guarantee of compliance with the installments.
In the market, there are several options. However, it is well worth analyzing them thoroughly because this type of credit is not always convenient than other financing sources.
Below, we will see five questions we should ask before signing for a pledge loan.
- What Alternatives Are There?
In general, dealerships that sell cars work with some banks that offer van pledge (รับจำนำรถตู้, which is the term in Thai) loans. However, the options can also be expanded by checking with other entities.
Brands (through auto finance companies) also make specific offers for some models at a very convenient price (lower than inflation). Some dealerships or brands work with credit cards. You can also analyze personal loans from banks.
- What Interest Rate Does Each Charge?
To compare, the first item is the (nominal) interest rate. However, this value can be misleading because expenses and taxes must be added to that rate. Therefore, you have to consult the Total Financial Cost (CFT).
- Pledge Or Personal Loan?
Pledge credit has a lower interest rate. However, it includes expenses that the personal loan does not have; constitution and cancellation of the pledge, at the beginning and the end of the loan; and in general, full auto insurance is required. In the case of personnel, you also have to take out insurance, but it can be cheaper.
- What If I Want To Sell The Car?
In the case of pledged loans, before selling, the loan must be canceled (and the pledge canceled). This has costs, which should be found out in advance. In contrast, personal loans do not have this obligation.
- How Do I Compare?
With all this information, the best way to compare the different options is to have examples. With the same amount (after subtracting the initial expenses) and a similar term, analyze the fees and choose the lowest.