Buying a car by credit – a standard?
According to statistics, anyone who buys a new car today takes out 80 percent of a car loan in order to finance their vehicle, whether new or used. Car buyers can currently benefit from the low level of interest rates on the market or use financing that is always very cheap via a car bank. Learn more at nophysic.com
With our website, we want to help you make the right decision when choosing the type of financing, to inform you about what is important and what is particularly important.
With us you have the option of using a comparison calculator to make the best financing offers comparable and, after making your selection, you can submit the financing request directly online to the bank of your choice without having to leave our comparison portal. A free, non-binding offer can be requested for credit offers with interest dependent on creditworthiness.
The use of our portal is of course free of charge for you as a consumer. We see ourselves as advisors and educators in matters of car loans. For this purpose, we have set up our website so that you can find articles on relevant auto loan issues with added value. We will introduce you to the banks in a portrait and also give you valuable tips and information on loans in general and on car finance in particular.
What is a car loan?
If a new or a used car is to be financed, the car loan is number 1 among the loans. It is then a so-called special-purpose loan, which is offered either directly by car banks or by other banks as car finance. Auto loans are generally characterized by low interest rates. When financing a car, it is important for the consumer to make sure that the borrowing costs are as low as possible and that the general conditions fit. A sense of proportion is also required when choosing the term of the loan.
If it is a car loan from the car bank, customers can benefit from low interest rates and less rigid approval requirements. However, if the loan is taken out directly from the dealer, you usually take away the discount when buying a vehicle.
For consumers, it is important to find out from the various providers before taking out the car loan to compare car loans in order to find the cheapest loan offer. It is not always the credit costs alone that decide. For consumers with a rather poor credit rating, car loan from the car bank is usually the first choice because the chances of approval are greatest. Further security must be provided here. As a rule, the banks of the manufacturers require a down payment for cheap financing offers and the vehicle registration must be deposited with the bank while the loan is running.
Different ways to finance a car
Financing – where do I benefit?
Car financing is usually one of the most common reasons why consumers choose to take out a loan. There are various financing options, which we will introduce to you in detail.
In addition to traditional financing through an ordinary installment loan, final installment financing has also become increasingly important in recent years.
The final installment financing is very similar to a leasing constellation, but always has the option that you, the vehicle owner, can also purchase the vehicle at the final installment.
The final installment or balloon financing is suitable for consumers on a tight budget due to the low rates during the term. In spite of a high-quality car, small installments are possible, which even an average earner can afford. Only the loss in value of the vehicle is repaid during the term.
The final installment can then either be redeemed in cash or further financed as residual value financing. With a final rate financing that is well calculated, it becomes possible to lower the rates by up to 50 percent compared to the rate of a traditional car loan. You can find attractive offers in this regard, for example, at the online subsidiary of Best Bank, carcredit.de
A normal installment loan – the classic vehicle financing
The classic installment loan, still up to date today
A cheap installment loan is the first choice for financing new or used cars if the vehicle is to be paid in full when the loan contract expires.
Then, as a vehicle owner, you have the option of giving the vehicle as a down payment at the residual value if a new car is to be financed. As with other consumer goods, installment loans are also repaid in consistently high monthly installments. In order to keep the rates as low as possible, long terms of up to 84 months are also possible.
Financing via a classic car loan offers the advantage that the installment loan can be used for free use and the choice among providers is particularly large. In addition, the installment loan for car financing, which is not applied for through a car bank, has the advantage that the vehicle registration document does not usually have to be deposited with the bank.
Only a few banks, such as Lite Lender, which offer a special car loan, expect that the vehicle registration document will have to be deposited with the bank during the loan term.
Benefit from the cash payer discount
Cash purchase – get discounts!
However, the decisive advantage of an installment loan from the third-party bank can be seen in the fact that he comes to the dealer as a cash payer and has a good chance of getting a decent discount when negotiating the vehicle price.
This discount is often significantly higher than the additional costs for the interest that have to be paid if the cheaper car loan through the car bank is not used.
So-called zero percent financing, where borrowers do not have to pay any interest or fees, is increasingly common in the auto banks. But often they are only a bargain at first glance and especially not suitable for customers who do not want to make a down payment.
In the case of zero percent financing, the dealer has to bear a large part of the interest subsidies himself and is therefore often not willing to grant a discount on the vehicle price for this reason alone.
Make a car loan comparison
Comparison – the best car loan?
Only those who compare can really save. Even if a small car is financed, it may be possible to find offers that ultimately make up a three-digit price difference in car loan interest rates. The effective annual interest rate has top priority when comparing.
The APR includes not only the interest, but also the processing fees. The percentages make loan offers of all banks comparable.
It is also important to ensure that a car loan is taken out, where the bank does not ask for prepayment penalty if the car loan is canceled early.
There are many banks that do not charge prepayment penalties. You should pay attention to this, because experience shows that the fewest auto loans, especially if a relatively long term is chosen, go through until the end of the term.
Given the multitude of options for financing a car, it is important for the consumer to compare the offers. If you invest some time here, you can save a lot of money. In the end, the purely optically best offer is not always the cheapest. Whoever finances with the dealership through the car bank may not pay interest because he is offered zero percent financing, but then a large discount is waived. Traders who subsidize the low interest rates are then no longer prepared to make concessions on the price.
Here the customer buys the favorable conditions by killing the estate.
Because the car loans are earmarked loans, the conditions are almost always particularly favorable with almost all providers, so that a comparison is really worthwhile. With the offers, you should also pay attention to whether free repayments and early loan repayment are possible without additional costs, and you should also find out how many months the loan can run. A good car loan comparison also provides information.
If you are looking for a car loan, we recommend vendor-independent car loan providers such as Barclaycard Bank, Norisbank, Postbank, Lite Lender and Targobank. Consumers can apply for a car loan from all providers on attractive terms. On our following pages and advice pages you can learn more about the providers and get more detailed information about car loans.
Advantages car loan
As a rule, auto loans – also from third-party banks – are offered at relatively favorable terms. Usually lower interest rates than loans that are not earmarked, so it is already worthwhile for consumers to use a car loan if a car is to be financed. The manufacturers’ banks generally also offer so-called final installment financing, which makes it possible to finance a car at particularly low rates.
Cost driver residual debt insurance
Residual debt insurance – unnecessary costs?
The tiresome topic of residual debt insurance has not only been concerned with consumer protection for many years. The fact is that many banks place greater emphasis on selling their borrowers residual debt insurance together with the installment loan.
Supposedly only for the best of the customer, which is why the residual debt insurance is often offered as a so-called credit protection package.
Nevertheless, especially if a cheap loan is important, you should not agree to take out credit insurance early. Certainly not without having checked what additional costs arise.
The cheapest loan can be really expensive by the additional insurance because the cost of the insurance premium are not reflected in the APR, but can move depending on maturity, loan amount and age of customers already in the thousands.
However, the promised security only partially offers expensive residual debt insurance. The conclusion is made without a health check and the fine print describes when the insurance does not have to pay. In any case, you should read this before accepting residual debt insurance.
Anyone who already has a life insurance and or an occupational disability or accident insurance is actually sufficiently covered and can do without the expensive residual debt insurance. An individual decision should always be made as to whether these additional costs are worthwhile.
Requirements for a car loan
Requirements – what do I need?
The requirements that a borrower has to meet if he applies for and wants to get a car loan are essentially the same as for other loans. In addition to a flawless credit bureau, a borrower must be able to prove to the bank that he has a regular attachable income from a permanent position.
The garnishment exemption limit for a single person is currently just over 1,000 USD.
If you already suspect that the loan decision is against you, you should submit your loan application together with a solvent guarantor. In any case, this increases the chances of getting a loan.
At some banks, credit decisions are made a little more generously, especially when working with interest rates that are dependent on creditworthiness. Borrowers with poor credit ratings then have to pay significantly higher interest rates due to the higher risk of default.
Our tip: If your credit rating is poor, a car loan from a car bank can be the better solution. Due to the required down payment and the deposit of the vehicle letter with the bank, security is provided here that does not exist with a blank credit.
We hope you enjoy reading our website and hope that you will find a lot of valuable information that will ultimately make it easier for you to apply for the car loan that is most convenient for you.
Car loan – our tips:
- Apply for a car loan before buying a car and act as a cash payer at the dealer. So you can negotiate an additional discount of sometimes 15%.
- You can find the latest news and driving reports on the subject of cars at autogazette.de.
- Use our car loan calculator and compare the conditions of the individual banks. If the monthly rates at 48 months are too high for you, just try a longer term, such as 60 months.
Find out in our guide about various topics, such as 0% financing, direct banks, advantages and disadvantages of interest rates dependent on creditworthiness, debt restructuring, residual debt insurance, financing for trainees, students, pensioners, civil servants, self-employed and freelancers.