A new car, an annual car or a young used- this is the dream of many car buyers. But you have to put some money on the table for this. This money is often not available at a moment’s notice, or even if the capital is available, it often makes more sense to let it work and use the resulting good credit rating for financing. When it comes to buying a car, a car loan is one of the most popular financing models, which is why in this guide on STERN.De take a closer look at the special loan for car purchase.
What is a car loan, what are its special features, what are its advantages and disadvantages, who offers it and what to look out for in a car loan? A car loan is a classic installment loan, but it is a special-purpose loan and can only be used for certain purposes. The car loan is offered by car dealers or car banks as well as by conventional credit institutions and does not differ from a conventional installment loan in terms of the general conditions. The only difference between a car loan and other installment loans is that it is earmarked for a specific purpose. The loan amount taken out via the car loan may only be used for the purchase of a car, and in some cases the lenders exclude other vehicles such as mobile homes.
For many people, buying a car is one of the biggest investments in their lives, apart from buying a house. A favorable car loan is correspondingly important, because with large sums even small differences in interest rates mean high cost savings. Our comparison calculator will help you find the most favorable loan for buying a car. Often the car loans in the STERN.De-autokredit comparison significantly cheaper than the offers of the dealers. This often applies even in the case of zero-percent financing.
Cheap car loan: these options are available
A car loan is a special form of installment loan. you can use any regular personal loan to buy a car. Mostly special car loans are more favorable. Because your car serves as collateral for the bank in the event that you are unable to pay the installments. They can have it foreclosed if they do not pay properly repay.
Often, therefore, the vehicle registration document (registration certificate part II) must be deposited with the bank. Some credit institutions such as ING (until 2019 ING-diba) do without this deposit. Nevertheless, the car can be collected by the bank.
Dealer, bank or online?
If you buy your car at the dealer, you will often be offered a car loan there. Virtually all major manufacturers have set up their own car banks for this purpose. However, these companies usually only finance vehicles of their own brand usually only if you buy the vehicle through a dealer. In addition, these offers are not always the cheapest.
| installment loan | non-tied, classic loan with fixed or variable interest rate and regular repayments. |
Most branch banks and savings banks offer car loans. This has the advantage that a personal contact person is available to help you. As a rule, an online loan is more favorable. Especially since you can easily compare the offers of many banks via the internet in the car loan calculator.
Car loans from independent banks can usually also be used to buy a used car from a private buyer. You can also use it to finance a motorcycle, a camper van or another vehicle.
The table summarizes the most common lenders for a car loan:
| house bank or other branch bank | Most people consider their house bank or another branch bank to be particularly trustworthy lenders. Here you will usually get a solid loan for the purchase of a car and benefit from the cash discount on the purchase. |
Tip: check the cash discount!
many dealers offer car buyers zero-percent financing. Even the best car loan can’t undercut this discount. However, car buyers must look carefully. You often receive an attractive discount as a cash payer.
If you forego financing, you can often get a discount of 3 to 5 percent. A zero-percent financing can quickly be more expensive than a favorable car loan. In our car loan calculator, favorable offers are available for less than 2.0 percent interest per year. Although buyers must take into account that the interest is payable annually, the purchase price discount is only payable once. Interest is only ever paid on the remaining debt; the discount, on the other hand, is applied to the full purchase price. In addition, you often do not have to finance the entire price of the vehicle with a loan. Even with a term of 3 to 4 years, the car loan can therefore be the more favorable option.
To compare the cost savings of the cash rebate and the car loan, it is worthwhile to look at the framework data in our car loan comparison on STERN.De to enter. The monthly instalment multiplied by the term of the loan gives the total cost. These must be lower than the sales price without a cash discount.
Three-option financing: be careful with the final installment!
In addition to the earmarking, there are differences in the type of financing for the car loan. ÜUsually they pay a part of the purchase price directly. However, the full purchase price can be covered by a loan.
Car dealers in particular often offer balloon financing, also known as a car loan with a final installment. Because a down payment is usually made, this is referred to as three-way financing, since the financing consists of the components cash payment, installment loan and final installment.
At the end of the term, customers can decide whether to buy the vehicle by paying the final installment or opt for follow-up financing. Many dealers also offer the option of returning the vehicle. Financing is therefore similar to leasing.
The table shows an overview of both types of car loan financing:
| classic car loan | the classic car loan is an installment loan for a specific purpose and is linked to monthly or other regular repayments. It can be paid off either as an annuity loan over the entire term or as an installment loan with constant installments. |
| Three-way financing | the great advantage of three-way financing is the low monthly installments that are incurred with this type of financing. In return, however, there is a high final installment at the end, which often accounts for more than half of the loan amount. The installments paid consist primarily of interest and compensate at most for the loss in value of the vehicle over its term. Often, this value compensation is also achieved by means of a down payment. |
Requirements for the car loan
As with all loans, car loans are subject to these three important requirements:
- the borrower must be at least 18 years old.
- you must prove your permanent residence in germany.
- The borrower must have a regular income and a sufficient credit rating.
The age limit of 18 years is prescribed by law, there is no exception. A sufficient credit rating and a regular income are also almost indispensable, because otherwise the banks fear that you will not repay your car loan. In principle, lenders are a bit more generous with loans for a car because the vehicle serves as collateral. You will not completely forego a realistic prospect of repayment.
Another prerequisite is often the willingness to deposit the vehicle registration document (part II of the registration certificate) with the bank. However, some banks do not require this deposit in order to reduce their administrative costs.
A loan for the car what is allowed?
The car loan is subject to a more or less strict limitation and thus serves solely for the financing of the vehicle. But what counts as a car? Which vehicles may be purchased with the car credit? these questions are usually clarified in the loan agreement, and it is not always necessarily a car that may be purchased with the loan amount borrowed, but it can also be a motorcycle or a mobile home, for example. Other lenders, on the other hand, work with tighter restrictions, and especially when financing is not provided by a conventional bank, but by a car bank or the dealer, very tight conditions apply and the loan can usually only be used for the purchase of a specific vehicle brand or even only for an individual vehicle. This clearly distinguishes the auto loan from a free, non-earmarked installment loan, where the loan amount borrowed is at the borrower’s free disposal.
But why is there a distinction between free loans and earmarked loans, and what are the advantages of using a car loan instead of a free loan for buying a car? For the bank it can be a certain security if they know, what the borrower uses the borrowed money for. Here we are working with a term that originally comes from the insurance industry, the so-called moral hazard. If the borrower uses the borrowed money for a specific purpose, for example to finance a car, this represents a greater security for the bank than if the borrower gambles away the money borrowed in a free loan, to put it bluntly, in the casino and thus risks house and home.
And even though almost every loan application asks for the purpose of the money and this is also entered in the loan agreement, the bank only has the handle to actually check this in the case of a earmarked loan, i.e. the borrower must actually prove what he has spent the money on. If a car is purchased with a special-purpose loan, it often also serves as collateral and some banks retain the registration certificate part II, the former vehicle title, until the loan is paid off, in order to be able to access the car in the event of payment difficulties.
car loan comparison: five steps to a car loan
A car loan is easy to find in five steps via the STERN.Apply for a car loan comparison.
1. step: enter data into the car loan calculator
At the beginning of this page is the free car loan calculator. He is looking for the best car loan, whether for a family vehicle, a sports car, a motorcycle or a mobile home. It also doesn’t matter whether the car is new or used and is bought from a dealer or privately. Possible loan amounts from 500 to 100.000 euros and terms from one to 10 years.
First of all, two pieces of information are necessary, namely
- The loan amount and
- The term.
The loan amount is calculated from the purchase price of the vehicle minus the available equity capital. It does not hurt to leave some money in the call money account for emergencies. But it should not be too much. It is cheaper to finance an unforeseen expense with a new installment loan than to leave too much money in the account without interest or almost without interest. ON STARS.You will find offers for small loans starting from a loan amount of 1.000 euro.
You should choose a term that allows you to easily finance the monthly installments, but still pay off the loan as quickly as possible. Furthermore, the repayment must be higher than the depreciation of the vehicle.
The amount of the installments automatically results from these two data, because three-way financing is not recommended due to the many disadvantages in the STERN.De-car loan comparison not offered. The intended use "new/used car is already preset and does not need to be changed.
2. Step: preselection of the provider
The STar.De-autokredit calculator shows the most favorable offers and the monthly rate. If the payment is too high, the comparison can be restarted with a longer term. If you are sure you can pay a little more, you can choose a lower term and thus higher installments.
Then you have to choose the best offer. Three things are particularly important:
- 1. A low effective annual interest rate
- 2. The possibility of an installment break
- 3. Free unscheduled repayments
When comparing car loan interest rates, it is important to know that most loans are based on creditworthiness. This means that an applicant with a secure and high income and few debts has to pay less than another borrower who earns less and has more debts. The 2/3 interest rate provides a rough guide to the actual interest level. This is the interest rate that two out of three borrowers pay at most (see question 3 in the Q&A).
You will only find out the final interest rate at the end of the application process. However, there is no obligation to accept the credit offer. If the interest rate is higher than expected, you can submit an application to another bank. Some credit institutions, such as DKB, ING or the Allgemeine Beamten Bank, offer all customers the same interest rate; TARGOBANK does so, at least for car loans.
In addition to the price, the general conditions are important. You can save a lot of money with free unscheduled repayments. Every euro repaid early not only saves interest, the opportunity motivates you to spend less money. Installment breaks can also be useful. If more money is needed in a month, for example because the washing machine has broken down, an installment can be suspended. It is cheaper than a dispo loan.
3. Step: the actual credit application
With one click on "continue the actual application is opened. First, you specify the number of borrowers. It is particularly worthwhile for couples to take out a loan together. Then both borrowers are liable for the loan. This improves the credit rating. Above all, self-employed people or those on low incomes should get their partner on board. This increases the prospect of favorable credit conditions. But other people can also be second borrowers, for example parents. For this, simply "two people" first and then select "other relationship.
Click on "next" and then öAnother input mask opens up. In this and the next section, you must enter further personal data such as place of residence and age, as well as information on the size of the household and property ownership. In addition, information about the employer and income must be provided. Information on regular expenses for insurance or rent is also necessary.
These steps are the same as taking out a regular installment loan. For the car loan comparison, you must also enter information about the vehicle. Because, as you know, this serves as security for the bank.
4. Step: determine insurance coverage
ÜThe car loan calculator can also be used to take out residual debt insurance. It takes over the installments if a predefined event occurs. In total, there are four different levels of cover, namely
- No residual debt insurance
- Payment in the event of death
- Payment in the event of death or incapacity
- Payment in the event of death, disability or unemployment
stiftung warentest considers residual debt insurance to be mostly superfluous for low loan amounts. Especially since many risks are already covered by existing statutory or private insurance policies.
For single people, the residual debt insurance that is always included in the package is a disadvantage in the event of death. This protection is only useful to cover dependents. However, if the death of a wage earner, disability or unemployment would jeopardize the repayment, insurance is a good option. This also applies if you have a high need for security.
5. Step: find out the car loan interest rates and complete the application
Now the time of disbursement is still to be determined. The car loan can be disbursed either at the fastest possible time or at a fixed date. In addition, a concrete offer is submitted. Here you can find out the actual interest rate, which may be higher than the most favorable interest rate displayed in the car loan comparison. Alternatives are displayed in parallel to the selected provider in case the selected bank does not offer the best car loan after all. Now you can still change your mind and download the application for another loan.
The application must be printed out and signed. In addition, you must confirm your identity either in a post office or online via the videoident procedure. For this you should have an identity card ready.
Depending on your choice, the money will be transferred to the specified account either at the next possible time or on the selected date.
3 questions and answers about the car loan comparison
Is there a car loan without SCHUFA??
The car loans in STERN.De autokredit comparison require a SCHUFA information. This is also in the interest of the applicant. In principle, a sufficient credit rating is a prerequisite for car loans without SCHUFA. It is only checked without access to the SCHUFA data. Often, the lenders are foreign banks that have developed their own credit checks.
What is the effective annual interest rate?
Interest is charged on most installment loans- these include car loans- calculated on a monthly basis. The stated target interest rate is divided by twelve. If you take out a loan with an interest rate of 6.0 percent per annum, you will actually pay 0.5 percent interest per month. Due to the compound interest effect, the effective interest charge is slightly higher than 6.0 percent. This is taken into account in the effective annual interest rate.
If the conclusion of a residual debt insurance is obligatory, the costs of this insurance must also be included in the annual percentage rate of charge.
What is the 2/3 interest rate?
Often, only a few customers receive the most favorable interest rate indicated. Therefore, this value is usually not suitable for a realistic comparison. Loans with interest rates that are not dependent on creditworthiness are usually more expensive, but all customers really do receive this interest rate.
For this reason, the legislator has stipulated that banks must always publish the maximum annual percentage rate of charge paid by two out of three borrowers. A 2/3 interest rate of 5.0 percent means that two out of three loans are concluded with an interest rate of 5.0 percent or less.
However, the 2/3 rate also has its pitfalls. Only the credit agreements actually concluded are included in the calculation. If a bank generally rejects customers with a low credit rating (who usually pay high interest rates), this reduces the calculated 2/3 interest rate without making it more favorable for the remaining customers.
That is why STERN offers.De autokredit comparison at the end of the application always alternative offers. Their interest rate refers specifically to the individual case. Here a comparison is possible without any problems. Taking out a car loan that is not dependent on creditworthiness can also be an alternative.
Facts and figures about the car loan
A survey of 337 people conducted by the ARAL gas station chain in 2013 on car financing showed that more than half of all vehicles in Germany are financed at least in part through a car loan, namely 56 percent. A further 10 percent of vehicles were leased, while around a third (34 percent) were paid for in cash. Younger people in particular use financing; in the under-40 age group, 62 percent use a car loan.
According to data from the statistics portal statista from 2014, germans primarily take out a car loan when buying a new car. In the STERN.With 13.3 percent, car financing is the second most important purpose after loans for furniture and removals with 14.7 percent.
In its own statistical survey, Creditolo, as a credit intermediary, sees the car loan in fourth place among the most frequently applied for consumer loans in germany. It is particularly striking that with this type of loan, despite the often high disbursement sum, a car loan without schufa is approved at a rate of around 72 %. This is because the credit institution knows that the car loan is earmarked for a specific purpose, for which the money is used and the car itself serves as direct collateral to which the lender can fall back if a default occurs.