When it comes time to buy the vehicle of your dreams, you may not have enough money on hand, so learn what vehicle financing is and how it works.

So, vehicle financing is simply a loan made by any banking institution through a CDC (Direct Consumer Credit).

Therefore, to obtain financing, you should go to a public or private bank and inquire with a manager about the conditions for securing a loan.

The loan amount and installment payments will depend on your salary.

Furthermore, be aware that in addition to financing, there are two other ways you can pay in installments to acquire the vehicle of your dreams: leasing and consortium.

So, follow along here and learn how vehicle financing works!

So, as we've already mentioned, you can finance your vehicle in three ways: bank loan, leasing, and consortium. Let's understand each one!

With a bank loan, you negotiate the loan amount and installment payments directly with a bank manager.

Important! Pay close attention to the financing rate charged by the bank when choosing which one to take out a loan from, as this rate directly influences the amount of the installments to be paid!

Once the loan is secured, the bank releases the funds and you can purchase the vehicle directly from the seller.

Also, be aware that a vehicle acquired in this way cannot be sold until all installments are paid, as it remains under lien to the bank.

In leasing, you rent the vehicle, which is purchased from a leasing company, which can also be a bank.

Therefore, at the end of the payments, you become the owner of the vehicle without having to pay anything more.

Furthermore, we have the consortium, which is simply another way to buy a vehicle by paying a monthly fee.

So, in a consortium you are part of a group of consortium members through a consortium administrator.

However, in this case, you will only receive the vehicle if you are drawn in a lottery (a vehicle is drawn every month), if you bid on the car, or at the end of the consortium installment payments.

Importantly, in the CDC (Credit Direct to Consumer) or leasing model, the installment amount is fixed. In a consortium, however, this amount can change depending on fluctuations in the vehicle's value!

Therefore, the amount you can finance will be proportional to the value of your salary or monthly income.

Because, by law, the amount to be financed must be up to 30% of your monthly salary or income.

Therefore, before seeking a loan from a bank, you should choose the vehicle you wish to purchase whose value fits within your budget.

In other words, for example, if your monthly income is R$ 5,000, the monthly payment cannot exceed R$ 1,500.

It's important to remember that if you have savings that you can use as a down payment on the vehicle, this will reduce the amount to be financed and, therefore, the monthly payment.

Well, in order to get loan approval, you need to meet certain requirements.

And what are they? Having all the required documentation, not having a negative credit history with SPC or Serasa, and the amount to be financed must be appropriate to your monthly income.

So, the documents typically required are: identity card (RG), Individual Taxpayer Registry (CPF), proof of marital status and proof of residence. In addition, documentation proving your income is also necessary, such as pay stubs, bank statements, and income tax returns.

So, with everything in order, you can get financing for the vehicle you've always dreamed of.

So, as we've already mentioned, there are some advantages and disadvantages to the different ways of financing a vehicle.

Thus, among other things, there are two conditions that differentiate bank loans, leasing, and consortiums.

Firstly, in bank loans and leasing, the monthly payment amount is fixed and negotiated at the time the deal is made, and it does not change until the last installment is paid.

In a consortium, the installment amount can vary depending on the market price of the vehicle. Therefore, this amount will likely increase over time.

Yet another characteristic relates to vehicle ownership.

Here too, bank loans and leasing differ from consortiums.

Because, in the first case, you take possession of the vehicle as soon as you make the purchase.

The difference between the two is that, in the case of a bank loan, the vehicle is pledged to the bank. In leasing, you rent the vehicle from a leasing company.

Therefore, you cannot sell the vehicle until you have paid all the installments.

In a consortium, you will only receive the vehicle if you are selected in the monthly draw, if you bid on the vehicle, or at the end of the consortium installment payments.

However, with a consortium, you can pay in up to 84 installments, whereas banks usually offer financing for around 48 to 60 months.

Therefore, in the case of a consortium, the installment may be smaller and fit your budget.

But if you want to have your dream car in your garage as quickly as possible, then a consortium is not a good option.

So now you know the differences between the vehicle financing options. Therefore, choose the option that best suits your needs!

And keep reading about the automotive world below!