Car loans: how they differ from a cash loan
The car is the collateral. Two consequences follow: the rate is markedly lower (RRSO 9.5–10.8%, roughly half of a typical cash loan), and the bank requires AC (comprehensive auto insurance) for the life of the loan.
The down payment matters more than people expect. Putting 30% down lowers the monthly payment, yes. It also lowers the RRSO the bank offers, because the bank sees less risk. If you can wait three months and put 30% down instead of 10%, it usually pays for itself.
Specialist car banks (VW Bank Polska, Toyota Bank, Santander Consumer) hold lower RRSOs than universal banks because they specialise in the product. Toyota Bank serves mostly its own brand's dealerships, VW Bank covers every brand in the group's stable. Santander Consumer offers the broadest range beyond the manufacturer groups.
New car or used — the gap is bigger than people expect. On a new car the RRSO starts at 8.5%, term up to 96 months. On a used car above 5 years the RRSO jumps to 11-12%, term usually up to 60 months. The age cap at the end of the loan term is typically 10 years (Toyota: 8, mBank: 12).
- ✓New or used cars (age limit depends on the bank)
- ✓Down payment: 10–30%
- ✓Typical RRSO: 9.5–10.8% (specialist car banks)
- ✓Term: 24 to 120 months