How car credit works

A car loan is a type of financing contracted with a financial institution for the purchase of a new or used car on credit.

Along with home loans, it is one of the most sought after by the Portuguese and often represents a good chunk of the family budget. It is relatively easy to obtain this loan compared to others and there is the possibility of access to 100% financing and terms of up to 120 months.

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What do lenders assess?

Before approval, the lender will gather some information to decide whether or not to grant the loan. It will therefore draw up a profile of the client based on certain criteria.

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Effort rate

Basically, this is the share that the car loan payment represents in your accounts, i.e. the weight that the monthly payment will have on the household's net income. This allows you to calculate whether you will be able to afford the loan installments you have applied for. The calculation is made using the following formula:

[Total Financial Installments / Household Income] x 100 = total as a percentage

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Customer risk profile

Several factors will be assessed here to determine your profile. If you have or have ever defaulted with the entity you are applying for financing from, you are likely to be denied, as you may be considered a risky client. Your history with the Bank of Portugal will also be checked, with all the information on loans taken out, any defaults and current debts.

Other data may be relevant in this field, such as your age, income, professional situation and others. But be aware that loans are assessed on a case-by-case basis and your application may be rejected by one financial institution and accepted by another.

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To buy your car with the best credit options, you can count on the help of Benecar - Cidade do Automóvel.

Benecar is an entity registered with the Bank of Portugal as a credit intermediary (registration nº 0000944) in the category of accessory credit and on a non-exclusive basis.

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Source: DOUTOR FINANÇAS

Translated with DeepL.com