There are several loan options available for buying a car. However, which one is best for you? Which one fits your budget and what you're looking for in terms of rates, terms, and installments?

Not only these factors, but what is the best option: secured loan, consortium, financing, vehicle leasing, payroll loan, or online loan?

According to a study conducted by Serasa ExperianCar loans are one of the main types of debt incurred by Brazilians, second only to credit cards and installment plans. Therefore, it is essential that you are aware of your budget and what percentage of your monthly income can be committed to a loan. Furthermore, include taking out this loan in your financial planning, along with all relevant information about it.

Is it worth taking out a loan to buy a vehicle? This is a recurring question when the subject is acquiring a car.

For those who don't have the full amount to buy in cash, meaning they only have a down payment (sometimes not even that), a loan emerges as a great alternative to acquire this asset. However, it's important to check the interest rates and payment terms when negotiating.

Regardless of the type of loan you choose, be aware that you will be committing a portion of your income to its repayment. Therefore, it is necessary to carefully analyze which option is best and ensure that the installment fits into your financial plan. This way, you avoid the risk of defaulting and being unable to meet your financial obligations.

The truth is that "being worth it" is a very personal matter. Do you need to use the car in your daily life? Do you enjoy traveling or need to travel a lot? Will you be able to keep up with the loan payments? Do you intend to keep the car for a long time? Is it a priority for you?

From the moment you ask yourself these questions and conclude that you will buy a car, it's time to develop a financial plan for it. In other words, even if you really want or need a means of transportation, you need to ensure that your budget is prepared for it. Otherwise, it won't be worth it, as you will end up in a state of over-indebtedness.

So, if you've decided to go ahead with the purchase and take out a loan, it's time to understand what you need to consider when making this purchase.  

As we mentioned, the financial commitment of a loan is independent of the type. You will need to make monthly payments, and this planning needs to be done very carefully.

Remember that debt should not compromise more than 30% of your monthly income. And, if you already have a mortgage, for example, take that into account when taking out a new loan. Therefore, analyze your financial situation, optimize your resources and cut expenses, so that the installment will not impact your budget so much.

Therefore, keeping this in mind, you need to check a few things when hiring, such as: interest rate, total effective cost (TEC), and the company's reputation. We will discuss these in more detail below. Read on!

First, before taking out a loan, you need to run simulations with different institutions and financial agents. This is because you will need to compare the interest rates offered by each of them. After all, the best scenario is a low interest rate, with a monthly payment that fits your budget and a good repayment term.

However, interest rates vary not only according to terms and different financial institutions, but also according to the type of loan chosen. Secured loans and payroll loans, for example, offer more competitive interest rates.

While an unsecured loan may have a higher interest rate for your budget, you may be able to get better repayment terms depending on your relationship with the bank. Therefore, careful analysis is necessary.

Another point that needs to be taken into consideration is the total effective cost (TEC). In other words, it is not enough to analyze only the interest rate. This cost refers to the sum of all fees, charges, interest, and expenses related to the loan.

According to Central Bank guidelines, financial institutions must provide all this information to consumers even before the loan is granted. Therefore, calculate this cost before making any decision.  

You've surely heard the phrase "it was too good to be true," haven't you? Notice that finding loan offers isn't difficult these days.

Some are very tempting, offering interest rates below market rates, long repayment terms, and not even requiring a credit check!

However, when you come across an offer that seems too good to be true, be careful. You may be falling into a trap, or in other words, a scam attempt.

The laws governing the financial sector are quite clear, and there are bodies that regulate financial transactions. Therefore, significant changes to the terms and interest rates offered are not permitted.

So, pay attention!

One way to ensure you're not being lured into a trap is to check the company's reputation. To do this, search for the company's CNPJ (Brazilian tax ID) with the Federal Revenue Service and verify its status. The company needs to be active, for example.

Furthermore, we recommend that you check the company's reputation on websites such as Reclame Aqui (a Brazilian consumer review site) and social media. Find out what the most frequent complaints are and how the company resolved them.

Researching the company is a safer way to take out a loan. This way, you can determine if the business is truly legitimate and if the institution offers good customer service and support.

As we mentioned, there are several types of loans available for buying a car. Below, we will present the options available on the market so you can analyze which is best suited to your profile and budget. Read on!

A secured loan, as you can imagine, requires you to provide an asset as collateral. In this case, it could be real estate or a vehicle (if you already own one). Since the institution can seize this asset in case of default, the interest rate is usually lower and the repayment term is longer.

Furthermore, we emphasize that the asset must be registered in the name of the person who will be requesting the loan.

A consortium is a good option for those who are not in a hurry and do not wish to take out a loan, or do not have an asset to offer as collateral, much less the cash for a cash purchase.

In this type of financing, a group of people interested in a specific type of vehicle (a category) with the same value and number of installments come together to purchase it. Each person signs a contract and commits to paying a pre-established monthly amount. Each month a draw is held or someone makes a bid. And so, each month, someone is awarded the vehicle.

Financing is still the most sought-after and contracted option. It's very similar to an installment plan. That is, you need to state the purpose of the loan (buying a car), and then the amount is released after a credit analysis, among other requirements stipulated by each financial institution.

Since the risk of default with financing is higher than with a secured loan, for example, interest rates tend to be higher. They vary according to your proof of income, payment history, relationship with the chosen institution, credit score, among other factors. Therefore, it is important to run several simulations with different companies.

Leasing works like renting a car, and the consumer pays a monthly fee to use it. The contract is valid for a specific period. At the end, it's possible to buy the asset outright, through financing, or even choose not to buy it at all.

Payroll-deducted loans are also a type of loan. They are exclusively for those who receive benefits from the INSS (Brazilian National Social Security Institute), such as public employees.

Since the benefit acts as collateral, the interest rate is much more attractive, ranging from 20% to 35% per year. However, the borrowed amount can only commit a certain percentage of your benefit. Therefore, the amount may not be enough to buy a car unless you already have a down payment.

However, it's important to point out that this is a cheaper line of credit. Therefore, it's worth analyzing your financial planning and perhaps saving up for the down payment and then taking out a secured loan to pay off the remaining amount in installments.

Furthermore, payroll-deducted loans do not have extra fees, unlike financing, which has other charges that significantly increase the total cost of credit (CET).

Finally, with the arrival of fintechs, online lending emerged as an alternative in the credit market. Typically, this type of loan is less bureaucratic, more transparent, and has lower operating costs than traditional institutions, allowing for better payment terms as well as better interest rates.

First, you need to verify if the company is authorized by the Central Bank to grant the loan. Then, check if it offers a fast, secure, and streamlined process. After that, compare the companies that offer this type of loan to choose the best option for you.

Furthermore, it's important to highlight that each fintech offers different loan amounts, with minimum and maximum values. Additionally, they also conduct credit checks, even though their processes are less bureaucratic.

Now, to understand which fintech company is best for you to get an online loan, let's look at the most famous and reputable ones on the market. Read on!

The purple bank aims to provide as many loans as possible to the majority of its customers. However, a personal loan may not cover the full cost of your desired car. Therefore, you might need to save up for a down payment.

Nubank's interest rates for personal loans range from approximately 2.1% to 5% per month. The repayment term is typically 24 months.

Rebel acts as a banking correspondent and was the first to use blockchain technology. The amounts the company usually lends range from R$1,000.00 to R$25,000.00, with interest rates around 2% to 8% per month. Therefore, opting for a used or nearly new car might be a good option.

Just provides a more streamlined and transparent process. Interest rates range from 2.55% to 7.99% per month. Additionally, the repayment term can vary between 6 and 24 months.

Geru was founded in 2015 and always strives to provide the best online loan rates. Through the website, you can enter the purpose of the loan, the desired amount, and the repayment term for analysis. Interest rates range from approximately 21% to 8.21% per month.

Lendico has a very secure process and has already lent over R$ 360 million reais.

The company offers loans ranging from R$2,500.00 to R$50,000.00, with rates varying from R$2,841.00 per month and repayment terms of up to 36 months.

The company Moneyman focuses on loans with smaller amounts, but grants credit to those with negative credit history, with a maximum limit of R$2,000. Therefore, it's worthwhile to save up to buy a car and pay the rest in installments, or opt for a used car.

Interest rates are around 15.71% per month and you can pay in up to 12 installments.

Simplic emerged in 2014 and has already lent over R$$45 billion in personal loans. Furthermore, the company grants credit to those with negative credit histories. The loan amounts, however, are lower, with a maximum of R$$3,500,000 and a repayment term of up to 12 months.

Interest rates range from 15.8% to 17.9% per month.

Creditas provides secured loans and payroll loans. Furthermore, the company offers attractive rates, ranging from approximately 11.21% to 21.6% per year.

BxBlue provides payroll loans intended for INSS pensioners and public servants. In other words, if you do not fall into this category, unfortunately, you will not be able to apply for a loan with this company.

Interest rates start at 1.49% per month.

As you can see, traditional institutions often offer higher interest rates and more limited repayment terms.

Conversely, fintechs have been firmly investing in the loan market, offering lower interest rates and very attractive payment terms.

To choose, you need to consider your financial capacity, as well as analyze the conditions offered by those companies where your profile is approved.

Furthermore, the process is quite transparent, secure, fast, and streamlined. Therefore, it's worth checking out the fintech companies that offer online loans.

We've selected fintech companies that offer smaller loan amounts, which certainly won't be enough to buy a car. However, if you already have a significant portion of the funds, for example, it could be a good alternative to financing.

And while you're doing that, discover 7 safe and affordable car models that are worth it for you by clicking the button below.