What is a direct automotive credit?

Are you thinking of buying a new car? Do you know how you are going to finance it? In this article, we will know one of the financing options for the purchase of a car, direct automotive credit , and what are your advantages and disadvantages.

What is a direct automotive credit?

In the market, there are several ways to acquire financing to acquire a new vehicle, either by going to a bank, a financial institution or, directly, with the automotive company in question.

Direct automotive credit is the loan that automakers offer independently to finance the purchase of a new or used car.

What are the advantages of direct automotive credit?

First of all, you should keep in mind that the advantages and benefits of these types of credits may vary, since they will depend exclusively on the automotive company that offers them.

We will highlight, then, the advantages that usually stand out in direct automotive credit, in general:

  • Often, the main advantage of direct automotive credit is its rapid approval . Many automakers guarantee to deliver it almost immediately and at the same point of sale, making the purchase of the vehicle much faster than with any other credit.
  • In addition, the financing is generally flexible , that is, the client can decide the amount and the number of installments that best suit his situation.
  • The requirements to access credit are usually less strict than those required in other forms of financing. In general, this type of financing is not very demanding in regards to the financial history of potential clients. However, it is required that the client is not in the lists of delinquent Dicom. How to know if I am in Dicom?

What are the disadvantages of direct automotive credit?

car loan

In general, direct automotive credit is the type of financing that has the most significant disadvantages . We highlight them below:

  • High interest: Since, as we have seen, the requirements to access this type of financing are generally lower than those of other alternatives, the companies that offer them must assume a greater risk of the operation, which implies the setting of interest rates. interest and operational expenses to be paid higher.
  • The credits granted by the concessionaires are only valid in the same automakers, so the variety of brands and models that can be accessed is limited to the stock available in the automotive in question.
  • In auto direct credit, the car is pledged . This implies that it has a legal limitation that allows its use but restricts its property, functioning as a guarantee for the creditor of the debt. Thus, for example, it cannot be transferred in a sale.

Thus, in a situation of economic difficulty in which the impossibility of continuing to pay the credit appears, if the pledge did not exist, the owner of the car could sell it and pay off its debt. However, if the car was turned on, it could not be sold, but should get the money to pay off the debt and after that, it could sell the car.

As you can see, direct automotive credit is much more immediate than other financing options. However, it has costs for paying higher interest and the car remains the pledge until full payment of the debt. Thus, the auto loan granted by a financial institution takes longer and demands more requirements, but in the long run, it keeps you more protected.