Finance your car safely – in a few words
- Each lender is allowed to set up the rules that applicants have to observe
- Instead of studying the application conditions for a long time, we advise you to compare directly
- Apply for your desired loan – without obligation – straight away
- After an immediate check, the software shows you the offers for which you qualify
Installment loan – the classic
The installment loan is the most widely used loan in the car loan area. The advantage of the classic is that the installments are paid consistently every month.
Car loan what to consider – first-hand information
This is how the term and the amount of the installment are initially determined. The terms range from 12 to 120 months. If the bank does not request the vehicle letter as security, the borrower is the owner of the vehicle from the start. However, if the registration certificate Part II has to be deposited as additional security, the bank is the owner until the vehicle is paid or the loan is repaid. This loan option gives borrowers easy planning over the entire term.
If you then use a credit comparison, you not only get a good interest rate, but can also adjust the rate to your income with a corresponding term.
Balloon financing – modern financing
With this loan option, the low rates are interesting for many borrowers. So you can often afford a car that is in the higher price segment. The low installment is due to the fact that a final installment is paid at the end. This can be financed further or paid in cash.
However, there are concerns that follow-up financing may no longer be cheap. Therefore, financing should only be selected if the borrower saves an amount at the same time as the installment to pay the final installment or if he expects a higher amount of money at the end of the term.
Three-way financing – the multi-faceted car loan
With three-way financing, the borrower, as the name suggests, has to deal with the car three ways after the end of the term. This financing is basically similar to balloon financing, but the car loan is concluded with a repayment agreement.
Borrowers can keep the car at the end of the term and pay the final installment. However, he can continue to pay the final installment with follow-up financing. He can also make use of his right of return and return the car to the dealer. However, the latter possibility could result in unexpected costs for the borrower. For example, if the agreed mileage is exceeded or if the car shows damage.
This financing should be chosen by borrowers who do not yet know exactly what they want to do with the vehicle at the end of the term.
Car loan what needs to be considered – the residual debt insurance
There are borrowers who offer residual debt insurance to the car buyer. This insurance is intended to cover death, unemployment and often a serious illness. If the borrower dies, the insurance company will take over the entire loan amount. However, this insurance is only suitable if it is a larger loan amount.
The residual debt insurance does not pay off in the case of a small loan. The borrower should know that this insurance is very expensive. Borrowers should also read the contract carefully. There are many restrictions, such as insurance only taking effect if unemployment is not your fault.
When it comes to car loans, what needs to be considered – find the right lender
With a loan comparison, the car buyer can find a suitable car loan what needs to be considered. It is good if the loan amount is asked beforehand.
This purchase amount is then entered in the loan comparison and the corresponding term is selected. With one click, he immediately sees the best provider, the amount of the credit rate and the interest rate.
However, the interest rate shown is not valid for all customers. This is calculated based on the customer’s creditworthiness. If there is a good credit rating, there will also be a good interest rate. If the credit rate seems too high, you can adjust the term upwards to suit your income.
However, with a long term, the car loan is a bit more expensive to consider. If the borrower opts for an installment loan, he has a good basis for negotiation with the dealer. There are then up to 30% discount depending on the model.
When it comes to car loans, what needs to be considered – online credit
Who decides for a car loan what to consider for an online loan, can expect good conditions. Contrary to branch banks like the house bank, direct banks offer better credit terms. The loan process is simple and straightforward.
After a provider has been found, the loan application is made. The customer enters some data in the form provided and sends it off. Within a few minutes, the preliminary loan decision will be made based on the data. After the borrower has accepted the offer, he sends the evidence of his creditworthiness to the lender. If the latter has checked the documents, the final loan approval will be made, if applicable.
The loan amount is paid out at the same time.
When it comes to car loans, what needs to be considered – which documents are important
Salary slips from the past three months are required to prove creditworthiness. Account statements from the same period may often be required. Proof of permanent employment is required. The customer must be of legal age and reside in Germany. Many banks also set an upper age limit. 70-year-olds often no longer get a loan. The reason is the increased risk of death. Banks also want to get an overview of other existing liabilities.
A small budget is therefore expected. The credit bureau is very important. This must not show any negative entries, otherwise a loan can be rejected.
The car loan in bad credit bureau
Borrowers with poor credit bureau could fulfill their loan request with a so-called credit bureau-free loan. However, the maximum loan amount here is only around 7,500 USD.
Not enough for a new car, but a good used one can always be paid for.