How to obtain a car loan in Lebanon - Easybanking.com.lb
How to obtain car loan
  
  
  
  
How to obtain car loan - Easybanking.com.lb
Car dealerships not only help their customers to choose their car but also pave the way for them to finance their purchase.

By working in coordination with the bank, the car dealership takes care of all the paperwork for the car loan.


OLD VERSUS NEW
With car loans, there are different rules depending on whether the car is new or used. With new cars, the down payment is usually smaller and the interest rate on the loan is often lower. Higher loan amounts are offered for new cars, and the repayment period for a loan may be as long as six years. For used cars, down payments may reach as much as 40 percent of the price of the vehicle and interest rates are usually two percentage points higher than those on new cars. The maximum limit on a loan for a used car is usually $150,000, and it will have to be repaid within a maximum of five years.

FILING FEES
Banks that offer car loans will almost always require application (filing) fees, varying between $25 and $300. Usually these will be paid at the beginning of the loan process, although there are some banks that include them in the interest.

FISCAL STAMPS
If the repayments are to be made by monthly notes, each note will carry stamps with a value of 0.15 percent (a $500 monthly repayment requires stamp fees of $0.75 or its lira equivalent per note). Sometimes a single note is made out for the entire amount of the repayments. Either way the cost of the fiscal stamps remains the same. When a bank fixes a schedule for payments to be made to them directly, no fiscal stamp fees are required. Notes are used because they are tradable commodities for the bank: In other words, they can effectively 'sell' the loan to someone else.

INSURANCE
Banks require borrowers to have total loss insurance on new cars. This saves banks from persuading borrowers to continue payments on a car that may no longer exist after a serious road accident. Payment for insurance varies from one car loan scheme to another. Some banks, especially those with affiliated insurance companies, offer the option of incorporating the cost of insurance in the monthly installments, sparing the borrower from paying what may be a sizeable premium at the beginning of the loan. Others insist that a year's premium be paid in advance and that proof of subsequent renewals be produced. The cost of all-risks insurance is based on a percentage of the car's value and, although the value of a car decreases as it gets older, the percentage on which the premium is based tends to rise. Many banks offering car loans require the borrower to take out life and permanent total disability insurance for the whole of the loan amount covering the repayment period. Some banks cover the life insurance fees themselves. Otherwise borrowers either pay for the policy within the monthly installments or on an annual basis.

PENALTIES
Banks adopt one of two methods for fixing the level of late-payment penalties. Some impose a fixed amount varying from $5 to $25, while others charge a percentage of the monthly installment amount - between two and twenty-two percent. In cases of early repayment, no banks give up any of the interest originally due if only 'a few' notes are paid off early. What number constitutes 'a few' is a matter of negotiation. When the whole outstanding balance is paid off early, it is common for banks to reduce by two percent the rate of interest that would have been due to them if the loan had run its full course. A few banks are prepared to forego all outstanding interest in case of early repayment of the whole loan amount.

APPLICATION PROCEDURE
The application requires the following: A copy of the official ID, a detailed statement of salary, including type of work, net salary, and a declaration of all current obligations such as rent, mortgage payments, other loans, or alimony. Salary and job details must be confirmed by the employer on company stationery. Most banks offering car loans do not require salary domiciliation, and less than half require a personal guarantor. Even those that require a guarantor generally restrict it to cases where an applicant's salary level is borderline with respect to the amount of the loan requested.