The car is the most expensive investment for most households. If something goes wrong or if you need a new one, you quickly face financial gaps. Here is a loan for car buying the optimal solution. How, where and especially under what conditions you get such a loan is explained in the following.
The best solution if you have to go fast
To afford a new car often lacks the necessary surplus. So, get a loan. But these are available in different forms, which makes it hard to see which loan is the right one. More…
- Car loan directly from the dealer
If you want to take out a loan, you go to the bank. Not always! If the loan is for a new car, you can apply for installment even at the dealer or manufacturer. This is, similar to a bank, divided into installments and set with interest payments. It is advantageous in any case a comparison between price at the dealer and the bank. To get a car from the manufacturer on installment payment, you have to pay between 10 and 20 percent, if the total is paid. So an informative chat at the bank should help get a quick overview of things.
- Credit at the bank
A car loan at the house bank can also be beneficial. Here you can, for example, take a loan for the total amount that you want to spend on the car. Then you can get the cash payment discount from the dealer or manufacturer. So it can be saved, if you can raise the money. However, one should also calculate exactly here, if the interest on the loan at the bank in the end will not be higher than those that would have gotten when buying a car loan from the dealer.
- The final installment financing
Another solution is the three way payment or, as it is still called, final installment financing or balloon financing. This is a car loan that leaves more options open. At the end of the financing you can decide if you want to keep the purchased car. For this, the completed final installment must be paid. However, this is between 25 and 50%. You can also pay by follow-up financing the balance or return the car. The advantage of having a loan car purchase over final installment financing is definitely the flexibility.
Which requirements you have to bring
The following important things are important to the bank in such a form of credit:
- The borrower is of legal age
- The borrower is resident in Germany
- The borrower can prove employment
- Steady income
- private credit entry as proof of credit
Some lenders want to know, in addition to the basic requirements, the driver’s license, the initial registration and the brand, as well as the model of the car. When buying used cars, it may even be that the mileage is checked. That should be taken into account.
Since a car loan purchase is the purchase of something that is objective, takes the bank, whether bank or dealer and manufacturer, the car as a security. The advantage here is above all that you do not need a guarantor. The disadvantage occurs, however, if it comes to failure.
If the borrower can no longer pay for the car, it will be granted and sold by the bank to cover the costs incurred. For example, unlike fast lending for a trip where you have nothing to sell, in the event of a credit loss, the item, the car, is taken back directly.
That’s why you should calculate exactly in such a project and consider what you can spend a month for a loan and wants.
Credit rate – you should pay attention
If you have found the appropriate Finazierungsmöglichkeit, you should first determine the duration and the rate. Of course, these are dependent on each other. Surely it is better to buy a shorter credit purchase to pay the installments faster, but this can also cause more problems. The following circumstances should always be kept in mind
You can never rule out that you suddenly get sick, lose your job or have an accident. That’s why low-middle-income households are likely to spend more on car loans to significantly reduce the risk of default. But there are other solutions and safeguards in such cases, the insurance.
Forms such as accident insurance or a residual debt insurance help to prepare for an emergency
What is a residual debt insurance?
A residual debt insurance is a hedge of the borrower with which he is covered in the event of illness or death for the remainder of the loan amount. The survivors are thus free of the remaining debts. The insurance company transfers the remaining amount to the bank in the event of death.
Credit for the new best friend – that’s how it works
To buy a new car, you can either look around the dealer, or search the Internet for the right new purchase. What is more worthwhile and how should you proceed? Here is a brief overview:
1. Price comparison – dealer or online purchase?
It is usually the case that the desired car, whether new or brought, can be found cheaper on the internet. The local dealer has the disadvantage of having extra costs, which gives online sellers better prices. However, an online purchase adds that you have to be on site at least once to see the car. In terms of price, dealers and the internet are pretty close. A clear advantage, however, is to compare the price on the Internet to have a better negotiation basis when buying directly from the dealer.
2. Credit car purchase – the appropriate installment loan
Here, too, you can compare the Internet and the bank, research the possible monthly installments by credit calculator and then head for the appropriate loan. One should always note in a car loan that a car letter could be necessary, as well as a backup to the lender, with which the borrower agrees that the purchased car belongs to the lender until the end of the completed financing.
3. Negotiate, Negotiate, Negotiate
Has it worked with the loan car purchase first, it is at the dealer about the price to negotiate. Here you can bring as a customer like the self-researched prices, which has been found on the Internet on loan portals. This one has better cards, if you want to take a discount on the total price of cash or just want to push the price something.
4. The calculator for the loan car purchase
With a cost calculator that can be easily found on the Internet, you can calculate the amount of monthly load without having to understand much of it. You simply enter all the data in the fields and automatically get an overview of costs, possibilities, interest, total payment and even final rate, depending on what you are looking for.
To be successful with a credit car purchase, you should go thoroughly and in detail on the search for suitable offers. On the Internet, many loan offers are mostly temporary. In this case, you should obtain additional information from credit institutions, such as the bank.
Before agreeing to a loan car purchase, one should not forget the term and the effective interest rate. The longer the term, the lower the rate, but higher interest, or a higher total amount of the payable total. On the other hand, it is advantageous to have lower rates on a small income in order to protect oneself in the event of a default in the payments. So that the joy of the new car does not fly too fast, it is first necessary to thoroughly inform yourself about all prerequisites and circumstances, to ask, to be advised and, if necessary, to compare, in order to find the right solution in the end.