It takes quite a large chunk out of savings to facilitate the purchase of a car and at times, this is simply not possible. Those who are short on cash for the purchase of a car have another alternative – vehicle finance. These loans are usually paid over a period of 36 to 72 months and provides the means to purchase a car without having a lump sum. There are many different car loan types across the world and this review takes a look at what Banco do Brasil Vehicle Finance has to offer.
See how Banco do Brasil's vehicle finance range compares to that of Standard Bank's.
About Banco do Brasil
One of the oldest banking institutions in South America, Banco do Brasil is a substantial contributor to the Brazilian banking sector. It’s been around for over two centuries and provides modern and traditional banking facilities to its millions of customers. The bank has a rich history of overcoming the odds and is able to adapt to changing economic conditions. It is considered one of the biggest banks in the world based on its asset holdings.
Important Things to Consider Before Taking Out Vehicle Finance
Vehicle finance is an easy way to get a new set of wheels, but it also happens to be one of the ways that debt spirals out of control. Consumers who aren’t careful can very easily apply for finance amounts that are bigger than they can afford. To prevent this from happening, there are a few things to consider before signing up for finance.
Compare the Interest Rates and Service Fees With Other Institutions
This is a crucial step for consumers who want to make sure that they’re getting the best possible deal. It means carefully scrutinizing the contract, as sometimes they might have a good rate but there are other hidden fees not necessarily charged by other institutions. This could push up the monthly installment which makes the entire deal more expensive over the period.
Take Note of the Penalties
Some institutions are happy to allow their clients to get rid of their debt well before the end of the finance period. Others, however, limit this as it could cause instability to their asset book and also a drop in revenue. Customers who wish to settle their finance before the end of the term should find out whether there are restrictions.
The Term Has a Big Influence on the Total Repayment
Getting into a finance deal can be daunting and the temptation is always there to go for the maximum term in order to pay a lower installment. Instead, consumers should consider lowering their term to the shortest term they can afford as this will reduce the interest they pay over the period.
Alternative Methods of Finance
Personal loans and other types of finance sometimes come in handy, especially when the vehicle is too old for the traditional finance route. They can end up a little more expensive and consumers are encouraged to compare the different packages.
Vehicles as Collateral
Some financial institutions are happy to structure their vehicle finance as personal loans, which leaves the customers are the owner of the vehicle from the start. This type of finance means more risk for the bank, which means they tend to be a little more costly. Others prefer to have their loans secured which means the vehicle belongs to the bank until the final installment has been paid.
Banco do Brasil Vehicle Finance Product Offerings
Loan With Vehicle Warranty
This is the only vehicle finance product offered by Banco do Brasil and is the go-to option for everyday car finance needs.
- Customers who don’t wish to use their everyday funds or emergency savings to purchase a vehicle will find this finance type ideal.
- Furthermore, the finance is up to 70% of the purchase price of the vehicle. The remainder of the funds will need to be in the form of a deposit, which is funded by the client.
- Customers can choose an installment term of up to 60 months.
- The repayment period only kicks in after 59 days.
- Also, the offer is only for clients of Banco do Brasil.
- Finally, the loans are only extended to vehicles younger than 10 years.
Those who prefer to save up for their assets should consider the Banco do Brasil savings accounts.
What We Like About Banco do Brasil Vehicle Finance
This is a simple and straightforward product. There are no funny expectations from customers and customers are aware of the majority of the terms well before they sign up for the finance.
The bank is also pretty open with the conditions of the agreement and have sections available on the website that details what would happen in the event that customers can no longer keep up with their payments.
Vehicles can reach a mature age of up to ten years before customers need to seek alternative routes of finance. This allows customers to benefit from the depreciation of good models without the hassle of financing a brand new vehicle.
Finally, the finance extended by the bank is only 70% which means customers will need to come up with the deposit. This encourages them to stay within their price limits and not overextend themselves.
Older vehicles that no longer qualify for this type of loan can be purchased with a different type of finance. Banco do Brasil also happens to offer consumer loans and we recently did a full review.
What We Don’t Like About Banco do Brasil Vehicle Finance
The glaring reason for us not to be over enthused with this product is that there is only one product. This makes it very tough for consumers to compare the product to an alternative. Furthermore, it also limits the type of assets customers can purchase.
Transparency is something that we find very important and in this case, we are not sure how the interest calculations work. The rates are not communicated upfront, which means that customers can expect to pay almost anything that falls within the banking limits. Other pricing is also not communicated upfront, such as service fees, contract fees, and more.
When a vehicle is the security of the loan, the banks own the vehicle until the customer has paid for it in full. This also means that if the customer falls behind in payments, the bank has the authority to repossess the vehicle, leaving the customer without transport.
Finally, with a downpayment of 30%, many customers may find this above their ability. They often resort to taking out further loans to make up the 30% which could leave them with costly finance and more than one extra installment to worry about.
What Customers Can Do Should They Fall Into Arrears
Banco do Brasil is very open with the fact that the vehicle acts as a security for the loan. Because of this, customers benefit from a lower interest rate than they would have if the loan had been unsecured.
With this in mind, it’s important for customers to keep up with their monthly payments. The bank can collect the vehicle at any time should the installments fall into arrears. Thankfully, there are routes customers can follow if they find themselves in a precarious financial position.
Payment arrangements and loan restructures are routes to follow when there is a problem with the payments. It also makes it a little easier on the payer if the loan is structured according to their needs.
There are a number of steps financial institutions need to follow before they can take possession of the vehicle in the event of non-payment. The customer remains in the loop of the proceedings. Customers will know what to do and what the bank expects of them. There are also certain remedial moves they have access to.
Critical Reviews Rating Banco do Brasil Vehicle Finance – 5 of 10
This seems to be a good product. However, there is just too little information to make an informed decision. The product enjoys a good structure but won't meet all needs, only some.
We are a little concerned that the high deposit requirement may make this product out of reach for many customers. It will then force them to seek out alternative, more expensive finance routes. It may also force customers to tap into their emergency savings which could leave them vulnerable in future.
The loan package includes some vital information should customers fall into arrears, which is great news for those amidst tough economic conditions. It doesn’t give us enough information on the pricing though. Customers will need to have access to a number of information sheets in order to calculate their monthly installment. They may not even be accurate.
The loan is only available to Banco do Brasil customers. This means it reduced the risk to the bank. But it also means that the bank will not attract outside customers due to the product. It could leave future customers wanting to pursue the product with other institutions. This as opposed to moving their entire banking relationship to the bank.
Finally, while we like this loan type, we are simply unable to grant a higher score. Customers only have the one product to go with. This makes it tough for the product to compete on a global scale.
Find out how Banco do Brasil did in their credit card review.