Now that car prices seem to be balancing out a bit more, it seemed interesting to us to talk about two of our own terms that we will read if we are about to finance a new or pre-owned car. The sacrosanct TIN and APRtwo of the most basic rates that we have to know and know how to differentiate when we venture into the purchase of a new car, especially since negotiating them well will mean a lower monthly fee.
What is the TIN
The TIN is the fixed percentage that is set as concept of payment for borrowed money and it tells us the percentage that the bank or financial company receives for giving you the money to buy your car. The TIN is the Nominal Interest Rate and it corresponds to the profit, remuneration or interest that the bank, the external financial company or the financial company of the brand itself will demand from you, month by month, for temporarily ceding part of its capital so that you can pay the seller, “in a “, Car. When you have paid it once, you respond month by month with the fee that includes the TIN.
What is the SAT
For her part, the Equivalent Annual Rate or TAE It is an indicator of the percentage that is used so that, before signing a loan for the car (or for the house) you can compare in different financial institutions who gives you the best APR and thus have a reference of the real cost of it. The APR represents the effective cost of the loan and is expressed as a percentage of the capital that they are going to lend you. Here you have to know that the APR includes fees and interest applied to the loan and also the expenses associated with it.
Since 1990, all financial institutions in Spain are required by law to publish the APR, important information since you can compare before making the decision. For example, if we have requested 100,000 euros in an operation with an APR of 1%, our loan will actually have a total amount of 101,000 euros, since it is what we must return to the bank that has lent us the money.
What role do they play in financing?
Like everything in life, here everything affects. The final TIN and APR will obviously affect us, but also the final amount of money what we are going to ask for, the time it will take to return it and whether or not we are going to contribute cash. The TIN will have a role that will affect the calculation of the installment monthly payments and the APR will affect the total cancellation of the loan. For example, if you have a 5-year lease and in year 4 you decide to pay what is left at once, you will pay less TIN and at the time of canceling you will have to check the APR associated with your operation.
What is more important, the TIN or the TAE
The TIN has a more informative nature and is added to that monthly fee. The TAE contains more information and there is more information about it, being able to compare in different entities, provides a clearer vision of the investment and it allows us to know if the first option is good or we will have to look for more. An important fact is that the percentage difference between the TAE (or the TAE) and the TIN is usually greater in personal loans than in mortgage loans. See, the more money we ask for, the less difference between them will exist.
How do I choose the best credit?
Like everything in life, asking a lot and having a lot of information. It may be a manual phrase, but it is recommended that you make a market research before to decide. Depending on your debt capacity and according to your financial profile, each entity will make a recommendation that will assess these two items and the following factors:
- APR of the contract.
- Additional commissions and that the loan is not linked to other products. For example, mortgages that have associated life insurance, use of credit cards, etc.
- Vehicle ownership. If you finance directly with the brand, the car will not be 100% yours until you have paid for it, such as in my case that I have a multi-option purchase.
This last point leads us to the next question.
Financial or bank?
By closing we will be brief. If we choose to finance with the brand’s own financial everything will be more comfortable and rarely they will not finance 100% of the amount of the vehicle. In my case, the best TIN and TAE were given to me by the brand’s financial company and I had a tighter fee than with the bank. Typically the options are more limited and the end of the loan (or residual value of the vehicle) is usually higher. At this point you will have to assess at the end of the loan if you keep the car and “refinance” or if you sell it to the brand.
If you prefer to go with your bank, you will have more offer and loan plans adapted to the purchase of new and even used vehicles. For example: BBVA, Santander Consumer Finance, Ibercaja or La Caixa have traditional plans and more hybrid plans that do not amount to leasing, but are similar. As we see in the salmon pages, the TIN is moving between 5.50% and 7% and the APR 8.28% and 9.28%. But as we said before, it is best to search and assess all the options.
And in your case, is a new or used car coming? Tell us in the comments!
