What Does It Mean to Buy a Car on Mortgage?
3 Answers
Buying a car on mortgage refers to a situation where a borrower applies to purchase a car by paying a portion of the down payment first, with the remaining amount being issued as a loan by the lender to the buyer in installments. Below are specific details about mortgages: Required documents for buying a car on mortgage: 1. Original and photocopy of ID card, household register, or other valid residence documents. 2. Proof of occupation and economic income. 3. Car purchase agreement/contract/letter of intent. 4. Other materials required by the cooperative institution. Conditions for applying for a car mortgage: 1. Possession of valid identity proof and full civil capacity. 2. Provision of proof of fixed and detailed address. 3. Stable occupation and ability to repay on schedule. 4. Good personal social credit, with no adverse credit records.
Buying a car on installment, simply put, means purchasing a car through installment payments. You borrow money from a bank or financial company to cover part of the car's price, and then repay the remaining amount in monthly installments, each payment including both principal and interest. For example, if you have your eye on a car worth 100,000 yuan, you could put down 20,000 yuan as a down payment and then repay the remaining 80,000 yuan over three years, with monthly payments of a little over 2,000 yuan. The advantage is that you can drive the car immediately, making transportation convenient without having to wait until you've saved enough money. The downside is that the interest adds several thousand yuan to the total cost. That's how I did it when I last bought a car—keeping the monthly payments within 20% of my income to avoid financial stress. When choosing, it's important to compare interest rates from different institutions, with repayment periods ranging from 2 to 7 years. A good credit record can secure a lower interest rate. Additionally, avoid late payments during the repayment period, as this can damage your credit score and affect future loans.
Buying a car on installment means taking a loan to repay the car price in installments. You need to pay a down payment first, followed by fixed monthly payments including principal and interest. This car purchase method is suitable for those without a large sum of cash, like when I was young and used it to realize my dream of owning a car early. However, be cautious about interest costs, calculate the total amount carefully, as the final payment will be significantly higher than the car price. It's advisable to budget monthly payments not exceeding 30% of your income, leaving enough for living expenses. Your credit rating will be checked during the application, and a high score may lower the interest rate. You can choose between short or long repayment periods, with short-term options having higher pressure but less total interest. Remember to make payments on time to avoid penalties.
