In today's society mobility is very important. Most people – both young families and older people – rely on car. Often, the purchase of a new or used vehicle not easily and without a cash injection to manage. Costly repairs and extreme defects on the old car can also mean financial ruin under certain circumstances. Those who are young and in desperate need of a safe and newer car may consider a car loan. But older people may also have to resort to a car loan to remain mobile. Those who do not want to consider cheaper alternatives such as motorcycles, car sharing, e-scooters or e-bikes for health reasons or due to lack of space will always need a conventional passenger car after all. Also, a poor connection to public transport often makes it mandatory to get a car. Many people then only have the option of buying a car with a car loan – not everyone has enough financial leeway to buy a new or used car and pay for it in full. But what should you look for in a car loan? And is there a difference between a car loan or a conventional personal loan?
Car loan: how to proceed?
A car loan is usually available from a bank or from a dealer – a used car dealer or an authorized brand dealer. Many car dealers advertise favorable car loans: Attractive conditions, such as a Zero-percent financing or a special low interest rate on the loan, are the rule. Isolated dealers may offer smaller discounts for financing or cash payment of the purchase amount. However, the car loan at the car dealership is not always the most favorable. Decisive are loan interest rate, term or type of financing. Often, the classic car financing from the dealer or manufacturer is a Three-way financing or Balloon financing. With such a final installment loan, the customer benefits from low installments and a short term, but a one-time payment or a redemption must be made at the end of the loan term. Only the individual customer can decide for himself whether there is sufficient financial buffer for a replacement. With this type of car financing, you should either have already saved the redemption during the conclusion of the contract or save it up during the term of the contract. Maintenance costs as well as repair and maintenance costs of the vehicle should be absolutely calculated before conclusion of a contract. Alternatively, the redemption can also be Follow-up financing or follow-up financing can be raised. Caution: Follow-up financing should be planned in good time – it is not uncommon for significantly higher interest rates to be offered, as the interest rates are not agreed again until expiry. Balloon financing is usually combined with a securitized buyback at the end of the loan term. Accordingly, the car dealership already commits at the time of the contract that the vehicle will be repossessed to the amount of the final installment. Heavy wear and tear as well as damage to the vehicle are regularly taken into consideration here in order to reduce the final installment.
High discounts as cash payer
Alternatively, the complete loan amount of the vehicle can also be raised using Car loan be paid. Many banks promise a quick payment. Flexible payment of the purchase price. In return, the customer should act as a cash payer at the dealer and benefit from high discounts. But: High discounts as a cash payer are in this day and age more old wives' tales than promises. Most car dealers simply do not care if the purchase price is paid in cash. In any case, you can ask the car seller for a discount – there is plenty of room for negotiation when buying a new or used car. However, there are much more promising ways to negotiate the purchase price of the vehicle with the seller. Here is above all negotiating skills. A price comparison with vehicles of other dealers preferable.
Credit comparison when buying a car
If you want to buy a new vehicle or a Financing a used car would like, should inquire first of all, which (subsequent) costs the auto financing brings with itself. It is important to take into account the monthly fixed costs as well as the maintenance and repair costs of the vehicle. One should be really sure that one can raise the monthly credit installment in the entire financing period. Helpful here are loan calculators of most banks, which calculate the monthly installment including interest as well as the corresponding term on the basis of the purchase price or the purchase price. Calculate net loan amount. Comparison portals such as smava offer not only a Loan calculator, but also a Loan comparison. Within a few minutes you can get an idea of the conditions of most loan providers. Here you can not only find information about the interest rate – on average, providers charge between 2 to 5% p.A. – collect, but also get a picture of the other terms of the contract.
Registration certificate part II and transfer of ownership by way of security
Special car loans differ from conventional installment loans above all in their lower interest rate. This is due to the fact that in the car loan the car itself acts as collateral. In doing so, the providers not only demand precise data on the vehicle (equipment, engine, mileage, year of manufacture, manufacturer, make, model), but also the deposit of the colloquial "security deed" motor vehicle registration certificate (Zulassungsbescheinigung Teil II). For the duration of the credit or. Contract period, the vehicle registration document (original) must be handed over to the motor vehicle insurance company and a so-called Transfer of ownership by way of security be agreed to. In legal terms, the vehicle thus belongs to the bank – the Bank is the owner of the vehicle. The vehicle may not be sold or exchanged for another vehicle during the financing period. In the case of a special car loan, details of the transfer of ownership by way of security should be requested in any case. For some auto loans, the vehicle may not exceed a certain vehicle age or higher interest rates will apply. The age or creditworthiness of the customer can also be a decisive factor in determining the interest rate offered when obtaining a loan offer. In the end, it is not the comparison portal but the bank that decides on the interest rate for car financing.
Different conditions must be met from bank to bank for a loan to be granted Car financing is possible at all. The banks also check the customer's creditworthiness online using Schufa and other credit agencies. This is how the bank checks the risk of default. The credit offer is always tailored to the customer's individual needs. Most banks require accurate information about the customer at the same time as the application for financing. This includes not only personal data, but also information in the form of a Proof of income. Most banks usually refuse a loan without proof of income. Evidence can also be in the form of an employment contract, bank statements or other documentation. Self-employed or students and pupils can not provide proof of income and may take a Debt risk in purchase. Since reputable banks want to protect not only themselves but also the customer from a financial fiasco, the Risk of debt avoided as far as possible. Not all, but some banks will also accept other forms of collateral, such as life insurance, a guarantee on real estate, etc. In any case, the banks try to interpret the collateral as objectively as possible in order to avoid indebtedness on the part of the customer. In addition, banks may include in the loan agreement a Residual debt insurance take into consideration. In any case, the additional costs and conditions of such a car loan residual debt insurance should be noted and possibly contradicted.
Application and flexibility
The flexibility of a car loan is also important. Important: Car loans are like other loans conventional consumer loans. This means that the credit according to the law either partially or completely repaid early may be. The bank is entitled to charge a maximum of one percentage point of the remaining debt in the form of a Early repayment penalty to demand. The topic "Unscheduled repayments and special payments on car loans" is handled differently by each bank. Many banks even waive follow-up charges for partial or complete special payments. The type of account management also plays a role – for example, whether special payments can be made online. A second borrower can also mean that the bank can offer significantly lower interest rates.
Car loan: Conclusion
Conclusion: There are different ways to finance a car. Many banks advertise with high discounts for cash payment – but by no means all sellers also grant such high discounts in practice. In addition, self-employed people, students and groups of people with low incomes have a relatively difficult time getting a car loan. A guarantor or a second borrower can help. In addition, one should consider not only interest rate and term, but also other modalities such as residual debt insurance or collateral assignment. Then nothing more stands in the way of car financing.