HOW TO GET A CAR LOAN IN JAMAICA 2023. Are you ready for a new car but don’t have the funds available at hand? Well, this article is for you. There are very few people that can actually afford to pay cash upfront for the full cost of a new or used vehicle and that’s why many may resort to obtaining an auto loan.
Having your own vehicle is one of the best luxuries a person can have as it offers great convenience when compared to public transportation and it offers a great sense of freedom and independence. Though it may be costly, many are willing to make the sacrifice.
As a result of the great interest in securing a motor vehicle nowadays, many financial institutions have made auto loans more accessible than ever before. Gone are the days when only certain people get to enjoy the benefit of owning a car. Nowadays the driving population is saturated with young adults, building careers, and starting families.
Here are some ways to secure a car loan in Jamaica.
The first step in the process is requesting your credit report. Your credit score is one of the most significant factors in deciding your auto loan rate — as it determines your eligibility for the loan and the maximum amount that you will receive.
Having bad credit may imply that a customer is a delinquent and may fail to stay committed to their agreement with the bank. Some banks may consider a customer if it is shown that the customer is making the effort to have their bad credit reverted or if they are not in arrears. At this step, the bank will usually request a credit report from the Information Credit Bureau, bare in mind this usually comes at a cost to the borrower of approximately $2,500.
Research Financial Institutions
Before considering a car loan or any type of loan, always explore more than one financial institution, this way you’ll give yourself options. It is always wise to have alternatives especially when it comes on to financial commitments.
In Jamaica, many banks offer auto loans with varying interest rates. Many of our major banks propose up to 90% financing and up to 10 years for repayment.
Understanding how much interest you’ll be paying is very important. Bear in mind that the interest covers the lender’s fees and risks while supplying them with a profit margin.
Presently, these are the going rates for the major lending institutions in Jamaica (The interest can be changed at any time. The banks retain the right to adjust the rates as they see fit.).
National Commercial Bank– 9.65%
Bank of Nova Scotia
New – 8.75%
Used – 10.25%
Jamaica National– 8%
Most Recent Payslips:
The financial institution will want to verify that you have a source of income to cover the loan so they will request your three recent payslips. Please note, you will need to be earning at least JM$80,000.00 after tax to acquire the loan. Most banks will further need the breakdown of your monthly expenses, that way they can ascertain if you can commit to the loan agreement.
If you are an entrepreneur and you do not possess a payslip, some banks may ask for a printout of your monthly revenues or a letter from a Justice of the Peace, to collaborate on your employment.
A job letter will be required for further verification to take place. This letter will most likely come from your Human Resources Department, and it usually entails, the tenure of your employment, your current position, and a breakdown of your salary. This letter should be signed and stamped by your HR department and should also possess a functioning contact number.
If you do not have an HR, getting a written letter from a Justice of the Peace should suffice.
(Identification documents, Valuation Report, etc.)
The financial institution will need a valid government-issued identification, taxpayer registration number, birth certificate where applicable, proof of address, a Pro-forma invoice from the car dealership, proof of deposit where applicable, a motor vehicle valuation report, and a copy of the certificate of motor vehicle fitness.
So if there is a car you like, reach out to the dealership and request a valuation report on the car you would like to purchase.
Getting a car loan also means you’ll have to get car insurance, comprehensive insurance at that, before the bank can complete the agreement. According to Progressive.com, Car insurance covers damage to your vehicle and protects you financially if you’re liable for someone else’s injuries or damages. Auto insurance can also pay for medical bills if you or your passengers are injured in an accident or you’re hit by an uninsured or underinsured driver. Your policy protects you up to certain limits, agreed upon by you and your insurer. In Jamaica, the amount you pay for car insurance may take into consideration the date of your license, if you are a male or female driver, what the vehicle will be used for, and how many accidents you’ve had in the past.
The bank will require processing fees from the borrower at the final stage of the agreement. This fee may vary according to the banking institution, as there is a particular percentage that is charged.
So this may be anywhere between 50- 80 thousand dollars, depending on your bank.
A down payment is an amount of money that you pay toward the purchase of the car when you initially buy it.
If it’s the case you have some extra cash and would like to make a downpayment, then you can go ahead. Doing this will mean the principal will be significantly lessened at the start of your loan. It can come in the form of a cash payment, the amount you’ll have to fund is the difference between the price of the car and the amount of the down payment. For example, if you buy a $40,000 minivan and pay a $10,000 down payment, you’ll have to finance $30,000.
Once the loan has been approved and insurance documents have been signed, the borrower will be given a cover note by the insurance company which should be sent to the car dealership. Once the dealership receives payment for the registration, it is taken to the tax office for further processing.
ALWAYS BEAR IN MIND:
Before taking out a car loan, always bear in mind that, a motorcar loan expense is just one piece of the cost of owning a vehicle – there’s also fuel, upkeep, and insurance. Your monthly payment needs to fit into your budget, while at the same time paying down the balance as quickly as possible.