invygo's Subscribe to Own vs. Buying a Car with Bank Financing: What's the Difference?

Regarding acquiring a car in Saudi Arabia, two main options are often considered: traditional bank financing and innovative alternatives like invygo's Subscribe to Own (STO) program. Understanding the differences between these two methods can help you make an informed decision based on your financial situation and lifestyle needs.

Buying a Car with Bank Financing

Choosing a Car: Select the car you wish to purchase from a dealership or a private seller.

Loan Application: Apply for an auto loan with a bank or financial institution.

Documentation: Submit required documents such as proof of income, employment verification, ID, and credit history.

Loan Approval: The bank evaluates your application based on your credit score, income, debt-to-income ratio, and employment stability.

Loan Terms: If approved, the bank offers loan terms including interest rate, repayment period, and monthly installment amounts.

Down Payment: A down payment is usually required, typically 10-20% of the car’s price.

Loan Disbursement: The bank disburses the loan amount to the car seller.

Ownership: You take ownership of the car, but the bank holds a lien on it until the loan is fully repaid.

Interest Fees and Repayment:

Interest Rates: Interest rates can vary based on your credit score and the bank’s policies. Rates in Saudi Arabia typically range from 3% to 7% per annum.

Monthly Installments: Monthly payments are calculated to cover both the principal amount and the interest.

Total Cost: Over the loan term (usually 3 to 5 years), you may end up paying significantly more than the car's original price due to interest.

Requirements and Approval:

Good Credit Score: A high credit score increases your chances of approval and obtaining a lower interest rate.

Stable Income: Proof of a stable and sufficient income to cover loan payments.

Debt-to-income Ratio: Banks prefer a low debt-to-income ratio.

Collateral: The car itself serves as collateral.

Approval Rate: Approval is not guaranteed; applicants with poor credit or unstable income may face rejection.

invygo's Subscribe to Own Plan:

Choose a Car: Select from a wide range of pre-owned vehicles available on invygo’s platform.

Subscription Plan: Opt for the Subscribe to Own plan, which enables you to get a car with monthly installments covering insurance, maintenance, and registration during your contract term (usually 36 months).

Documentation: Submit only basic documentation such as a valid ID and Saudi driver’s license.

Approval: invygo’s approval process is typically faster and more lenient compared to traditional banks.

Monthly Payments: Start making interest-free monthly payments that cover all costs.

Ownership Option: You can buy the car at the end of your contract term by making a final payment or return the car and walk away with no commitment to pay.

Benefits of Subscribe to Own:

Low upfront cost: Eliminates the need for a substantial initial payment.

Comprehensive Coverage: Monthly fee includes maintenance, insurance, and registration, reducing unexpected expenses.

Flexibility: You can cancel anytime without penalty.

Simpler Approval: A less stringent approval process, making it accessible to more people, including those with lower credit scores.

Total Cost: While the total cost might be higher compared to an outright purchase due to the convenience and included services, it offers predictable monthly expenses and peace of mind.

Comparative Analysis:

Hefty down payment: Bank financing requires a significant down payment; invygo's STO plan does not.

Monthly Payments: Both options involve monthly payments, but invygo’s includes all car-related expenses.

Interest and Fees: Bank loans incur interest fees over the loan term;

invygo’s fees are inclusive and transparent.

Approval Process: Bank loans require a good credit score and stable income, with a risk of rejection; invygo has a more lenient and faster approval process.

Ownership: With bank financing, you own the car once the loan is repaid. With invygo, you have the flexibility to own the car after the subscription period or switch to another vehicle.

Conclusion

Choosing between invygo's Subscribe to Own plan and traditional bank financing depends on your financial situation and personal preferences. Bank financing might be suitable for those with a good credit score and sufficient funds for a down payment, looking to own a car outright.

On the other hand, invygo's Subscribe to Own plan offers flexibility, convenience, and all-inclusive monthly payments, making it an attractive option for those who prefer a hassle-free car ownership experience.

Evaluate your needs, financial stability, and long-term goals to determine the best option for acquiring your next car in Saudi Arabia. Whether you choose bank financing or invygo’s innovative plan, both have their unique advantages to consider.