It is the captive banks that are currently creating a new car loan scheme, which is gaining momentum, expanding the financial capabilities of buyers. What is it about?
Such a concept, and sometimes you can find the term "captive bank", is still little known to Russian borrowers. These types of financial institutions issue car loans directly from manufacturers. They usually specialize in one brand. Captive banks are structures that are also called "pocket" banks, because they are created to serve the interests of a single financial industrial group. Ignoring the name, which is so difficult to understand, let's try to understand further what the matter is here.
From what commercial banks offer, a car loan from a manufacturer is traditionally distinguished by more attractive rates. The main function of such a loanincreased sales of the group's products. But the rest of the parameters for captive banks are quite standard: the maximum loan term is 5 years, while a down payment (15-20 percent) will be required, comprehensive insurance is required. Non-standard conditions for car loans from the manufacturer (where the down payment is 10 percent, there is no insurance, etc.) can also be found on the market. But at the same time, interest rates are very high.
From time to time, captive banks launch promotions on car loans, under which a loan can be obtained on attractive terms or without a down payment.
Disadvantages of classical schemes for purchasing cars on credit using banks
The current rates on car loans are a source of high bank profits, and the conditions of such loans are still quite difficult for car enthusiasts. To buy a car on credit, first a person goes to the bank, then to a car dealership, then chooses a vehicle and leaves on it.
The same scheme, but in a slightly different version: a person goes to a car dealership, chooses a car, turns to a bank representative located on the territory of the store, waits for a loan to be approved and leaves in a brand new vehicle. But in this case there are always four participants: we are talking about the manufacturer, the bank, the car dealership, the end consumer (the buyer of the car on credit).
Thus, there are always intermediaries between manufacturers and end customers who also demand remuneration for their work. And the corresponding financial burden is imposed on the borrower.
What scheme is offered for car loans by captive banks?
The non-traditional captive scheme assumes that the producer and the financial organization for the consumer are, as it were, united in one person. For example, a bank called "Tokyo-Mitsubishi" serves only Japanese automobile companies operating in our country. The advantage of this scheme for borrowers is that the fewer intermediaries there are, the cheaper it will be to buy a car.
In addition, captive structures give the most interesting offer not only for the model range of the brand being sold, but also for the entire package of this product. For example, "Toyota Bank" offers to purchase all configurations: "Comfort", "Elegance" and "Prestige". And besides, the collection of necessary documentation is reduced. BMW Bank gives you the opportunity to become the owner of a car with just a couple of documents.
Which banks operate like this?
Captive banks are, first of all, the well-known Toyota Bank, Mercedes-Benz Bank, BMW Bank and others. It is not difficult to guess which auto brands are promoted by them. It is fair to say that the above organizations are not included in the list of leaders, because the traditional car loan scheme is still ahead. And there are reasons for this:
- Russian cars, despite the inflated prices, are sold with the support of the state. The program of loans for domestic cars was developed by Russian financial institutions that are accredited by the government. An example of a captive domestic bank isLada-Credit, which is closely connected with the automotive industry represented by AvtoVAZ.
- Traditional car loan schemes provide freedom to choose a brand, while captive structures promote only their own, realizing the need of buyers for reliable vehicles made in Japan and Germany. Their goal seems to be to increase brand loy alty.
Where can I find the "bank on wheels"
Representative offices of captive banks today are easy to find in car dealerships that are official dealers of BMW, Toyota, Mercedes-Benz brands. Of course, the client will also meet with representatives of universal financial institutions there, but car loan programs will differ significantly.
If a person is not interested in any other products, that is, he does not plan to take a consumer loan, for example, from Sberbank, then you need to use the services of a captive bank for automakers. If you are planning to buy Toyota, then you should go to Toyota Bank, which, in addition to low rates under the program, will please you with tire service.
Before going to the salon, be sure to read the information on banking sites. There you can find out about special promotions, choose the right car loan program, find a loan calculator. But such programs have certain terms, so the interest rate may change.
BMW on credit
Let's consider how a popular captive car loan bank works.It is very easy to buy BMW cars. For example, "BMW Bank" offers more than ten programs, special offers have been developed for diplomats and corporate clients. In addition to foreign-made cars, you can easily become the owner of a motorcycle of the same brand. The starting rate for a car loan is 6.75 percent. The age of the borrower must be from eighteen to sixty-five years. Any documents with memos can be downloaded to a computer, and then printed. You can learn how to get a loan to purchase a BMW from the step-by-step instructions. In addition, the client will most likely be offered casco insurance without additional information.
In the event that a person already has his own financial structure, which suits him absolutely in everything, you need to contact a credit institution that he trusts. If there is none, and he is interested in specific brands, then you should look for a pocket bank.
The fact is that it is much more profitable for specific automakers to create their own bank in order to provide buyers with the best conditions. Thus, experts predict the sustainable development of such a car loan system.
We have considered what it is - a captive bank. We hope the information provided in the article was useful.