Vehicle finance – Hire Purchase, Personal contract and Personal loan to buy a new car

Buying a car is the desire of many people. However, consumers do not always have enough money to pay for the full value of a car. Fulfilling this dream is not that difficult as Malta is home to numerous new and used car dealerships.

Those who cannot pay for the full amount of the car can use some financing methods, such as car leasing, personal loan or a car loan. Some credit contracting can be done through a loan bank, online loans, among other options.

But, to make a more assertive choice, you need to know each of these types of credit. In addition, it is necessary to keep in mind which car you want to buy, to know the value of the vehicle, and from there to research which type of credit best fits your choice.

Car leasing in Malta

Car leasing is a good option if you want to always have a new car. There are two types of car leasing. In one modality, at the end of the contract, which can last up to 60 months, the customer needs to return the car to the leasing company. In the other modality, it is car leasing with an option to purchase at the end of the contract. For this, the customer only has to pay a residual installment. The residual value to be paid at the end of the contract is prearranged between the customer and the leasing company.

NISSAN offers this type of leasing in which the customer makes a deposit (in some cases it is possible to join the leasing without paying a deposit), and according to the deposit paid they calculate the monthly payments. It is important to remember that the interest rate to be practiced will vary according to the deposit that the customer pays.

In this type of car leasing, the average interest charged is around 5.5% and is balanced over 60 months. Lease purchase has become a very popular financing option for businesses.

Car loan

Car loan is granted by banks and financial lenders. These institutions lend the amount for the customer to buy a new or used car. In exchange for this, they receive interest on top of the total borrowed amount.

In some situations, it is possible to purchase a vehicle with a car loan without having to make a down payment. In other cases, the consumer may be required to make a deposit of up to 15% of the value of the car.

Currently, the car loan can be paid off in up to 84 months. Therefore, it is possible to state that for cars priced below €10,000, the term for paying off the car loan is a maximum of 60 months, and for cars priced above €10,000, the maximum term is up to 84 months.

Car loan interest rate

The interest rate may vary from one institution to another. Analyzing the interest rate offered by HSBC bank, we find 6.99% interest rate and 7.3% APR. To access the loan at HSBC, it is necessary to meet certain requirements. HSBC Personal Banking and HSBC Advance customers can borrow a maximum amount of €50,000. However, HSBC Premier customers can borrow a maximum amount of €70,000.

It is important to remember that the maximum amount that can be released will depend on the bank’s internal analyses. Therefore, only clients who meet the criteria of the institution will be eligible.

If the loan amount is €9,999, it can be paid in installments over a minimum term of 6 months and a maximum term of 60 months. Loans of more than €10,000 can be paid in installments over a period of between 6 months and 84 months.

Personal loan to buy a car

In this type of loan, it is common for the interest rate and the total cost of the loan to be higher than that of a car loan. However, for many customers, it is a more accessible modality, as in some cases, the bank’s customer already has a pre-approved loan offer. In addition, some institutions are able to offer lower interest rates that can be as attractive as the interest rates on a car loan.

Although this is not the best option, it has become an option for many consumers.

Interest rate on a personal loan to buy a car in Malta

The interest rate may vary from one institution to another. In the simulation made by the writing team of our website, we took into account the current interest rate and APR applied by HSBC bank.

Taking into account that the loan amount will be

To do the simulation, we took into account that the personal loan amount will be € 10,000, and the interest rate 6.99% and the APR of 7.3% , now we can make a simpler calculation. Taking into account these data, the loan will be repaid in 7 years. Applying the APR, we find the value of € 151.38 per month. For 83 months the amount paid will be €151.38 and the last installment will be €149.20. In this way, the total amount paid for this loan will be € 12,713.74.

It is good to emphasize that the total amount that can be released in a personal loan may be related to the type of client and the risks that are calculated by the institutions. The interest rate and APR that were used today for this loan simulation may change over time. For this reason, it is necessary to do research with the bank chosen by the customer and decide whether he really wants to take out a loan or not.