The first option of Claudia Arias to finance the purchase of her vehicle was not to ask the bank for an auto loan. After comparing terms, commissions and interest rates between loans to purchase a car and a payroll loan, the graphic designer -of 35 years- chose the second alternative.
“My idea was to buy a car to make it a taxi and have an extra income in the future,” says Arias. “I saw it as a business, so I decided to ask for my payroll.” In 2013, Banorte lent him 120,000 pesos and, along with his savings, he bought a 2014 TIIDA Nissan to put the taxi plates he had invested in to work.
The designer covered the debt in four years
Two months before the deadline, which managed to deduct two months. “At the bank, they offered me an interest rate of 18% on payroll loans and auto loans at a rate of 14%. The downside of the latter was that if I wanted to advance payments, they did not condone interest, the payment did not go down. On the other hand, with payroll credit I could make installments to capital and reduce my debt, “explains Arias.
“We’ve done research and financial runs on why people choose to buy a payroll loan instead of an auto loan to buy a car. We found that payroll loan rates are more expensive (almost 10 percentage points above) than car loans, “says Mario Di Costanzo, president of the National Commission for the Protection and Defense of Users of Financial Services (Condusef). .
Despite the difference in rates, people continue to opt for payroll loans. “It’s not that it’s wrong,” explains the official, but the banks have modified their products according to the needs of customers.
According to data from the Bank of Mexico, the average rate of payroll loans in 2017 was 24.6%, while that of auto loans was 11.8%. Almost double.
In BBVA Bancomer, for example, the interest rate on payroll loans is 22.1%, while that of auto loans is 11.4%. Banorte, on the other hand, has a rate of 24.2% for payroll loans and 11.7% for auto financing.
In contrast, HSBC has payroll credit at 24.8% and the automotive at 11.3%. With Scotiabank, the rate is 26.9% for payroll loans and 11.9% for loans to buy vehicles.
“It would seem absurd that people opt for a more expensive loan to finance their car, but we realized that there are some banks that offer financing only for specific brands, such as Scotiabank with Mazda, for example,” says Di Costanzo.
Other banks, the expert explains, investigate if the payroll credit will be used to buy a vehicle and offer the client the possibility of leaving the invoice of the car in guarantee, with the condition of lowering the interest rate. “This could explain things, because by giving you the payroll credit you buy the cash car and take advantage of better prices,” explains the president of Condusef.
They make the road easier
The essential requirement to obtain a payroll credit is that the client has three months working and the collection of the credit will be automatically made from his salary, according to the Condusef. While to be subject to an auto loan is necessary to have a minimum salary of 10,000 pesos. In addition, the loans derived from the salary are consumer credit and there is no restriction that they must be used to buy something specific.
Last November, Jaquelin Ávila asked for a payroll credit of 65,000 pesos to pay off his new car: a SEAT León 2016. In December, the chemical-pharmacist-biologist, aged 31, used his voucher, savings account and aguinaldo to liquidate the salary loan of ‘one hit’ and only keep the debt of the car loan that also granted.
Making this operation allowed Ávila to change his car to a more recent one and take advantage of the December promotions of the automotive agency.
The payroll credit Ávila accepted was with Banamex at a rate of 32%. While the auto loan, with which he currently pays his car, has a 12% rate with Volkswagen Bank. “Before accepting this car loan I asked if I could advance payments without penalties and that will be my strategy,” he says.
If you are going to use payroll credit, measure your debt capacity. Not because they lend you up to a year or more of your salary, commit your future income. You must consider that the following months or years you will be receiving your incomplete salary.
“Try that the payroll credit does not exceed 20% of your debt capacity”, suggests Di Costanzo. That is to say, if you earn 20,000 pesos per month and in fixed expenses you occupy 8,000 pesos, you will only have 12,000 pesos left for variable expenses and savings. Of this last amount, only 20% (2,400 pesos) could be used to pay the payroll loan.
According to Di Costanzo, one of the disadvantages that this method of financing can have is that the auto – not being tied to an auto financing – is not obliged to have insurance. Which should be compensated with an immediate and voluntary contracting.