Whether to go into credit bondage? Buying the cheapest car

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Is it profitable to buy cheap cars on credit?

Whether to go into credit bondage? Buying the cheapest car 

No money, but a car is necessary as air. What should I do? As always, the first thing that comes to mind is to buy a car on credit. But is it worth these days to get into loan bondage, bound by the obligations to the Bank? After all the interest in our country is not the same as in Western countries. But despite this, every day we are convinced that Russia’s economy is gradually recovering, the Central Bank refinancing rate will continue to decline. We also promise that incomes will gradually rise. Maybe today is the best time to take a loan on a car? Let’s deal.

 

Today we will look examples of buying expensive new cars, price tags of which in recent years has been copied by factories countless times. In difficult economic conditions in our country today, it is unlikely that the majority of motorists will pull a purchase on credit of cars worth over 1 million. That is why over the past year, a sharp increase in new car sales is observed mainly in the low-price segment. Based on this, we decided to compare the terms of loans from different banks when buying the cheapest new cars on the Russian market.

 

So as a basis we took the cars without showing off: Lada Granta and Lada Kalina.

In General, all the cars we looked at, the base, at the most attractive price in the salon. As they say, cheap and cheerful. To go, then you can.

 

And now let’s go to the official websites of the car brands and see what they offer today. Also let’s see what the terms of car loans offered today, several popular banks.

 

Lada Granta

Whether to go into credit bondage? Buying the cheapest car 

Of course, the Lada Granta is not the car you have always dreamed of. Still, it’s not Lada Vesta, which, apparently, has obsessed hundreds of thousands of people in the country. But, despite his modesty, Lada Granta for their money – it is a normal car. Ride it’ll be no problem.

So let’s see how much you can take this car and as a result will be an overpayment on car loan with different loan terms.

 

Currently, the company AVTOVAZ has already started to ship to dealers a restyled version of the Lada Granta, which now has the design elements, created in the style of Lada Vesta. Unfortunately, at the time of this writing, sales of the updated version hasn’t started yet. So while you can purchase the previous version, the cost of which starts from 554 000. Naturally, in such a configuration in the salons you will hardly find a car. Therefore, the minimum, most likely, this car will cost you 600 000. For this money you will buy the 1.6-liter base dorestaylingovyh version 106 HP

 

Now, let’s see what offers us the savings Bank. According to the official information about the car loans posted on the website of Sberbank, the term of loan is from 3 months. up to 5 years.

Minimum loan amount – from 45 000 rubles, maximum – 5 000 000 rubles.

Loan interest rate – from 14.5% to 16% per annum depending on the loan period.

For those who receive salary card of Sberbank, the discount interest rate of 1%.

 

Since we touched on the topic of buying a new car in the absence of any kind of large amounts, let us assume that you want to buy this car on credit for a period of 5 years. Let’s count how much we overpay on car loan with a down payment of 30% and 50%. Less we do not suggest to pay as a down payment, or the loan for 5 years will be onerous, since the overpayment will be huge and very profitable. So, that’s how much we overpay on long car loan (interest rate of 16% per annum). In final expense don’t go spending on car insurance (hull insurance) and life insurance (required). Insurance policies are purchased the entire loan term (required).

 

Downpayment: 30% (180 000 RUB.)

 

Model: Lada Granta

 

The cost of the car: 600 000 rubles.

 

Credit: 420 000 rubles.

 

Loan term: 5 years

 

The overpayment on the loan: 192 815 RUB.

 

So, in this case, the monthly payment will be 10 213,58 rubles. Overpayment on the loan for 5 years will result in 192 815 rubles (plus don’t forget you each year for 5 years will be required to purchase insurance and enter into a contract of life insurance).

Whether to go into credit bondage? Buying the cheapest car 

As you can see, even buying a cheap car is not particularly advantageous, since due to the large interest rates over a five-year period it turns out a decent overpayment. So, this loan is more appropriate for those who plan to pay off 5-year loan ahead of schedule by about 2-3 years. For those who want to minimize monthly payments, it is better to conclude a credit agreement for 5 or even 7 years (in the savings Bank car loan for 7 years not provided).

 

Downpayment: 30% (300 000 RUB)

 

Model: Lada Granta

 

The cost of the car: 600 000 rubles.

 

Credit: 300 000 RUB.

 

Loan term: 5 years

 

The overpayment on the loan: 137 725 RUB.

 

When you make a 50% down payment, the overpayment on the loan for 5 years will amount to 137 725 rubles, which is significantly less than for the same loan period, but with a down payment of 30%.

The monthly payment will amount to RUB 7 199,42 of Course, these conditions are also beneficial to those people who plan to repay the debt ahead of schedule – 2-3 years.

Whether to go into credit bondage? Buying the cheapest car 

Now let’s see how much we overpay on the loan in case of registration of the contract for 3 years. So, the conditions are the same, the Bank is the same.

With a down payment of 30% monthly 3 years we will pay 14 765 rubles. The overpayment for 3 years will amount to 111 574 rubles.

At 50% payment, the monthly payment will be 10 547,11 roubles, and an overpayment – total 79 696 rubles.

 

No. payment
Payment date
The amount of the payment
Principal debt
Accrued interest
The outstanding balance

1
July, 2018
10 547,11
6 547,11
4 000,00
293 452,89

2
August, 2018
10 547,11
6 634,40
3 912,71
286 818,49

3
September, 2018
10 547,11
6 722,86
3 824,25
280 095,62

4
October, 2018
10 547,11
6 812,50
3 734,61
273 283,12

5
November, 2018
10 547,11
6 903,33
3 643,77
266 379,79

6
December, 2018
10 547,11
6 995,38
3 551,73
259 384,41

7
January, 2019
10 547,11
7 088,65
3 458,46
252 295,75

8
February, 2019
10 547,11
7 183,17
3 363,94
245 112,59

9
March, 2019
10 547,11
7 278,94
3 268,17
237 833,65

10
April, 2019
10 547,11
7 375,99
3 171,12
230 457,65

11
May, 2019
10 547,11
7 474,34
3 072,77
222 983,31

12
June, 2019
10 547,11
7 574,00
2 973,11
215 409,31

13
July, 2019
10 547,11
7 674,99
2 872,12
207 734,33

14
August, 2019
10 547,11
7 777,32
2 769,79
199 957,01

15
September, 2019
10 547,11
7 881,02
2 666,09
192 075,99

16
October, 2019
10 547,11
7 986,10
2 561,01
184 089,89

17
November, 2019
10 547,11
8 092,58
2 454,53
175 997,32

18
December, 2019
10 547,11
8 200,48
2 346,63
167 796,84

19
January, 2020
10 547,11
8 309,82
2 237,29
159 487,02

20
February, 2020
10 547,11
8 420,62
2 126,49
151 066,40

21
March, 2020
10 547,11
8 532,89
2 014,22
142 533,51

22
April, 2020
10 547,11
8 646,66
1 900,45
133 886,85

23
May, 2020
10 547,11
8 761,95
1 785,16
125 124,89

24
June, 2020
10 547,11
8 878,78
1 668,33
116 246,12

25
July, 2020
10 547,11
8 997,16
1 549,95
107 248,96

26
August, 2020
10 547,11
9 117,12
1 of 429.99
98 131,83

27
September, 2020
10 547,11
9 238,69
1 308,42
88 893,15

28
October, 2020
10 547,11
9 361,87
1 185,24
79 531,28

29
November, 2020
10 547,11
9 486,69
1 060,42
70 044,59

30
December, 2020
10 547,11
9 613,18
933,93
60 431,40

31
January, 2021
10 547,11
9 741,36
805,75
50 690,05

32
February, 2021
10 547,11
9 871,24
675,87
40 818,80

33
March, 2021
10 547,11
10 002,86
544,25
30 815,94

34
April, 2021
10 547,11
10 136,23
410,88
20 679,71

35
May, 2021
10 547,11
10 271,38
275,73
10 408,33

36
June, 2021
10 547,11
10 408,33
138,78
0,00

Total credit
379 695,96
300 000,00
79 695,96

In the end, as you can see, it is most advantageous to arrange the credit contract for a period of not more than 3 years with an initial payment of at least 50%. Of course, if you don’t have that kind of money for a down payment, then cheaper is better to get a loan for 5 years, but at the first opportunity to try to repay it in advance. In this case, you will avoid large overpayments on the loan and keep the lowest monthly payment.

 

Now let’s simulate a more rigid credit – the period of 7 years. Unfortunately, every year more and more people make out the leases voluntarily draping on my neck credit loop. Why the loop? All the matter in great the credit period during which the overpayment for the new car will be onerous and extremely unfavorable. Don’t forget that during the same period your new car significantly cheaper in connection with natural attenuation. Also all this time you will be required to pay for life insurance and disadvantageous to buy insurance.

 

Since Sberbank does not provide a car loan for a period of 7 years, let’s see how much we overpay for the term of the car loan offered by another Bank. For example, for some programs a car loan for 7 years can be issued to VTB Bank. The loan rate depends on down payment and terms of insurance of the borrower. Take the average rate of 18 percent per annum.

Whether to go into credit bondage? Buying the cheapest car 

In the end, with a down payment of 30% of the monthly payment

for 7-year loan to Fret Grant will be 7 435 rubles. And now attention! The overpayment on the loan will amount to 278 204 RUB Now add to this overpayment to their costs on the life insurance, the hull insurance policy to include a standard cost of maintaining a car (petrol, Parking, vehicle tax, car wash, maintenance, garage/Parking, insurance, etc.).

Also keep in mind that you will pay for the car 878 204 RUB., however, after the payment of the loan, its market value will not exceed 250 000 rubles (excluding inflation). So, as you can see,

A 7-year car loan, even on a cheap car – it’s a noose around his neck without soap.

Plus the only 7 year loan is a significant reduction in the monthly payment compared to 3 – and 5-year loans. Therefore, 7-year loan you need to draw only in one case: if you are going to repay the loan ahead of schedule in the next 2-3 years.

 

No better situation with a loan for 7 years with an initial installment of 50% of the car value. So, under these conditions, the monthly payment will be only 6 739 rubles. But the overpayment on the loan is still large – 197 717 rubles.

So again, even with a 50% down payment to issue 7-year car loan for yourself is beneficial only for early repayment of debt within 2-3 years.

 

Lada Kalina Universal

Whether to go into credit bondage? Buying the cheapest car 

Now let’s compare the overpayment on the loan when buying a Lada Kalina. Let’s count how much we overpay, buying on credit universal Lada Kalina in the base on the mechanics (1.6 liters) for 475 000.

A great option for young people and for those who like to carry giving the fruits of their labor. The machine is tough enough for the Russian roads and quite roomy, despite its modest size.

Also let’s consider some variants of the loan term: 3 and 5 years. The loan term of 7 years, we will not consider because you have already given you to understand that it is unprofitable, except for scheduled early repayment. The interest rate of 16 percent.

 

Downpayment: 30% (142 500 RUB.)

 

Model: Lada Kalina Universal

 

The cost of the car: 475, 000.

 

Credit: 332 500 RUB.

 

Loan term: 5 years

 

The overpayment on the loan: 152 645 RUB.

 

So, for 5 years with a down payment of 30 percent of the overpayment on the loan will be 152 645 rubles. Monthly payment amount 8 086 roubles.

It should be noted that during this period, the new car is likely to drop by at least 50%, of course, if in the country during this time will not be recorded more inflation.

Also recall that every 5 years you have to feed the insurance company paying for insurance (on average, usually 9 percent of the value of the car) and buying a life insurance policy.

 

Initial payment: 50% (237 500 RUB.)

 

Model: Lada Kalina Universal

 

The cost of the car: 475, 000.

 

Credit: 237 500 RUB.

 

Loan term: 5 years

 

The overpayment on the loan: 152 645 RUB.

 

The monthly payment on the loan within 5 years in this case will be 5 776 roubles. The overpayment on the loan will be 109 032 RUB.

Agree, decent, considering that the loan we took is less than 250 thousand.

So, of course, more profitable to take out a loan for a shorter period. At least 3 years, or during the five-year loan to repay the debt early. In this case, the overpayment will be much less.

Whether to go into credit bondage? Buying the cheapest car 

For example, if you apply for a loan of 3 years with an initial payment of 30 per cent, the monthly payment will be 11 690 rubles. Yes, a lot. Especially given the low average salaries in Russia. But the overpayment for 3 years you will be only 88 330 rubles. Believe me, during this time, the new Lada Kalina will rise in price by this amount. Respectively, received a loan, you’re unlikely to lose this overpayment. So your losses will be associated only with a natural decline in the market value of your car.

 

For a 50% payment of the loan, issued on 3 years, the overpayment on the loan will amount to only 63 093 RUB Monthly payment will be 8 350 RUB. and this is a more profitable option. But, alas, not everyone in our country can afford to pay 50 percent as a down payment when applying for a loan to buy a new car.

 

Summary

Whether to go into credit bondage? Buying the cheapest car 

As you can see, the meaning and benefits of buying cheap cars on credit in some cases. But do not forget that any loan will have to pay out of pocket, sharing with the Bank a portion of their salary/income. The longer the loan term, the more you will pay to the Bank. All loan programs always better to repay the loan early.

The ideal option is when making the loan to Deposit as the initial payment to the greater amount.

 

Also advise you when buying a new car (even the cheapest) to remove pink glasses and to include brains. It is best if you take a calculator if you can’t count all in mind and will consider all your main monthly costs after buying a car.

So you will be able to know in advance what percentage of your monthly income will go to owning a car.

To do this, add to monthly loan payment spending on fuel, Parking, car service, car wash, etc.

Also, by adding all annual costs of insurance (CASCO, CTP, life insurance, taxes), divide them by 12 months. Next, add the result to your monthly expenses regular expenses for operation of the machine, and the obligatory Bank payments on the loan. So you will open their eyes to the true state of your financial Affairs. Otherwise, you risk monthly spend most of their salary/income, with the result that you will not have enough money for everyday life.

 

If you have a small salary, or work place does not allow you to build forecasts for the future (work unreliable: can reduce, dismiss), it is not necessary in this case to contact the credit. You know that in 3-5 years in our country, can happen anything. Yes, you can just lay off or lower wages.

In General, if you are sure that you will be able to repay the loan the entire term, then buy a new car it is better to postpone until better times. In this case, pay attention to the secondary used car market, where a lot of cheap decent cars.

Yes, of course, the used car is used car. But there is nothing to worry. Buying a used budget car, you quietly proustite on it for another 2-3 years. Well, during this time, you will save a bit more money or find a more reliable job with a different salary and then buy a new car on credit, by making a normal amount as the initial fee to pay in the future.