Car loans are intended to finance the purchase of a new or second-hand vehicle. Thus, those who do not have sufficient means to buy a car can take out this type of loan. However, you should know that this is subject to specific regulations, but what exactly are they?
The Scrivener law, to defend the rights of the borrower
The Scrivener law was introduced to protect the rights of borrowers when taking out consumer loans, including car morgages. This law was subject to several modifications regarding car loans in particular. It dictates three main clauses. It stipulates the obligation of a reflection period: the borrower has 15 days to study the offer and make comparisons. During this time, he or she analyses the offers in order to find the formula best suited to his or her needs. The French car loan regulations also mention a withdrawal period: during the 14 days following the signing of the contract, the borrower can withdraw without being obliged to justify himself. Finally, there is a limit on the loan. It cannot exceed €75,000. In addition, it must be repaid in a minimum of three-monthly instalments. For a car loan, a prior loan offer is mandatory.
The Neiertz law and overindebtedness
The Neiertz law is also a vehicle loan regulation in France. It focuses mainly on the responsibility of the lender with regard to possible overindebtedness. This law stipulates that the financial institution must keep a copy of the signed loan agreement. This agreement is governed by reference rates imposed by the Banque de France. This regulation also specifies the setting up of overindebtedness committees. In the event that the borrower is no longer able to pay back the loan, these committees carry out mediation actions with the aim of finding a common agreement between the two parties.
The particularities of the car loan
Unlike a mortgage, a car loan does not require a personal contribution from the borrower. In addition, it has a relatively short term. The car loan is intended for financing a car purchase only. Similar loans are offered by financial institutions for the purchase of motorbikes. In addition to banks or micro-finance institutions, some car dealers and sellers offer car loans. In any case, it is advisable to make a good comparison of offers before any commitment.