Car loans bear similarities with other forms of loans such as home loans and personal loans. Car loan services are offered by both banks and microfinance institutions in Cambodia. Requirements and terms for car loans vary from bank to bank. You’ll have to put in a bit of effort and time if you are looking for the best loan deal you can find on the market.
When applying for a car loan there are a couple of things to consider such as your monthly income, interest rates and the loan term. Most banks are willing to give you a car loan if you have a steady income and/or collateral. You can take out a car loan for both used cars and new cars.
New Car vs. Second Hand Car
Benefits to a New Car
One specific benefit of buying a new car is that it comes with a warranty. New cars generally have fewer repairs in the first couple of years. Buying a new car also means that you get low-interest rates on your loan whilst enjoying the latest technology.
Benefits of a Second-Hand Car
Recent graduates from college are advised to get second-hand cars as they are cheaper. Second-hand cars usually depreciate at a slower pace. This gives the car owner an advantage as there’s a probability that they could sell their car at a price just slightly lower than their second-hand purchase value.
How to Apply for Car Loans
The process for applying for a car loan varies from bank to bank. Below is a generic list of requirements that Cambodian banks require before issuing out a car loan. The document requirements will depend on whether you’re applying as an individual or a business.
Requirements for individuals are:
- National ID or Passport
- Resident book, Family book or Residential certificate
- Proof of income (employee contract; salary slip or bank statements, letter of employment confirmation)
- Other relevant documents
Requirements for businesses are:
- National ID or Passport
- Resident book, Family book or Residential certificate
- Proof of income
- Patents, Business license, Certificate of Corporation
- Other relevant documents
Taking All Things Into Consideration
Before applying for a car loan, always take all things into consideration. By doing so, you’ll have a clearer overview if you’re able to take on another loan and commit to it. Here are a few important questions to ask yourself:
- Personal Finance- are you able to pay all your bills on time and in full?
- Loan interest rates and additional charges – will these affect your debt-to-income ratio?
- Emergency funds – are you still able to put aside money for a rainy day
Getting a car loan can be a huge undertaking, and that’s why a thorough research to get the best car loan deal is essential. Its also important to get a second or third opinion before getting a car loan. If and when the car loan is approved, it’s encouraged that it should be paid on time- as this will help you gain a good credit score.
