If you want to buy a new car, you can either pay all the costs at once or finance the car with a car loan. A cheap car loan is an alternative financing method for the purchase of new and used vehicles or for costly repairs to your own car. A car loan comparison shows the right financing solution among the enormous range of offers.
Especially in times of low interest rates, it can be worthwhile to opt for a loan. Particularly good and favorable offers can be found online. Make our car loan comparison and find the best offer among numerous providers.
Car loan vs. Installment loan – what’s the difference??
At first glance, a car loan does not appear to be any different from a normal installment loan. Unlike an installment loan, however, a car loan is earmarked and may only be used for the purchase of a vehicle. some lenders even define very precisely for which type of vehicle the loan may be used. So you can not buy a mobile home with every car loan. Some contracts are even explicitly tied to a specific vehicle.
The difference between this and a conventional installment loan consists of three key features:
|earmarking||a car loan is earmarked for a specific purpose, d. H. It is earmarked exclusively for financing in the automotive sector|
|transfer of ownership by way of security||the financed vehicle serves as collateral for the lender|
|payment||the loan installments are usually not paid to the borrower, but directly to the seller of the vehicle|
Unlike leasing contracts, the major advantage of a car loan in the fact that car dealers also often offer satte when buying by credit discounts give. Under certain circumstances, such a discount can even compensate for the cost of the loan, which makes the car loan one of the best financing methods when buying a car.
Purpose-based loans offer security
Earmarked loans – such as a car loan – offer the lender a certain degree of security, because he knows exactly what the money will be used for. This reduces the risk that the borrower will be tempted to take risks with the money and later become insolvent.
This security enables, loans that are earmarked to be issued at more favorable conditions as installment loans, with which the borrower can ultimately do whatever he or she likes. In addition, the amount of the loan is linked to the purchase price of the car.
Monthly charges for a car loan – how high are the installments??
Just as with the installment loan, you pay your car loan in contractually fixed installments over a set period of time from.
The amount of the installments depends on several factors:
- Value of the carThe more expensive the car, the higher the rate.
- Deposit: when you buy a car, you can make a down payment. Depending on the amount of the loan, the installments may be higher or lower.
- TermWhen you take out a loan, you decide over what period you want to pay off the loan. The longer the period, the lower the monthly rate.
The choice of lender
There are several points of contact for taking out a car loan. Besides the possibility private to conclude a contract with friends or relatives also give branch or direct banks car loan, likewise usually also offers at the dealer the possibility of concluding a credit agreement directly with them.
Regardless of which provider you choose for a car loan, banks and lenders generally require the car as collateral until the loan is paid in full. For this, you usually deposit the registration certificate part II (this used to be the vehicle title) or at least a copy of it with the lender, whereby the ownership of the vehicle serves as security.
The so-called transfer of ownership by way of security serves as a safeguard against non-payment and allows the lender to sell the car if the borrower can no longer service the installments.
When the last installment is paid, the owner of the car also gets back the vehicle registration certificate (registration certificate part II). At the same time, the transfer of ownership as security enables lenders to grant loans on very favorable terms, as the risk of non-payment is very low.
when granting a car loan, lenders require certain securities. In addition to the salary statement as proof of regular income questionnaires must also be filled out on private information about your person, and as a rule, a query is also made with schufa. Only in rare cases is such a request waived. You should thoroughly compare your personal income and expenses in order to be able to determine realistic rates for you.
Like any other loan, the terms and conditions for a car loan can vary considerably. Therefore, even when buying a car, you should not fall back on the next best financing option, but rather check carefully where and at what conditions you apply for the loan. It is important to have a transparent presentation of the conditions and costs of the loan. The following points should be clarified:
- amount of the down payment
- Amount of the monthly installments
- term of the loan
- Fees and interest (nominal interest rate, effective annual interest rate)
- Possible free unscheduled repayments
- Loan amount and total costs
Only after taking all these points into account can a statement be made about how attractive a favorable car loan actually is. Because many offers that appear favorable at first glance have hidden costs when you take a closer look.
Zero-percent financing for the car
Car dealers often work with car banks through which they offer their financing. It is not uncommon for dealers to lure customers with attractive zero-percent financing.
0% financing can actually be really good offers. Nevertheless, you should be careful with such offers. For it can be that the bad surprise with these offers in the small print waits.
The reason why car banks can offer such favorable loans is that – unlike conventional credit institutions – they make their money not from interest, but from the sale of cars. And, of course, the incentive to buy increases if the financing is attractive.
Save with the cash discount when buying a car
However, this does not automatically mean that a 0% car loan is the cheapest option. The reason is the cash discount: almost every car dealer offers this discount discount if the car is paid in full and in cash immediately. In such a case, three to five percent of the list price is usually waived.
You cannot benefit from this advantage with zero-percent financing from the car dealer. If, on the other hand, you decide to take out a car loan with another lender and can pay for the car in full and in cash, you can take advantage of this discount. For this reason, it is important to check the terms of the loan carefully, because you may save more with a loan for which you have to pay interest than with 0% financing, because you can take advantage of the cash discount.
Can I get a car loan?
A car loan is a loan like any other and is only granted if certain conditions are met:
Requirements for a car loan
If you meet these criteria, you can usually apply for and be approved for a car loan without any problems.
If you have a negative credit record with schufa, it is rather difficult to take out a loan. Nevertheless, there are ways to get a car loan if the credit rating leaves much to be desired.
Car loan with poor credit rating – credit without schufa check
There are more and more lenders who will grant a loan even if the credit rating is poor, or. Offer a loan without a schufa check. However, the price for this are then worse conditions and significantly higher effective annual interest rate. Because favorable car loans are usually only issued against high securities. In principle, however, a regular and sufficiently high income is a prerequisite for such loans as well.
Car loans without a schufa score are mainly offered by direct banks. However, anyone who accepts such an offer should first compare car loans and weigh up carefully whether it is worth taking out the loan – especially if the credit rating is insufficient.
Incidentally, the chances of obtaining a loan despite a poor credit rating are particularly good for car loans. The reason for this is that the car itself can easily be used as collateral for the lender. In the event of insolvency, the bank can include the car in the loan.
Incidentally, some credit inquiries are also schufa-neutral, which means that although the inquiry is reported to schufa, other credit institutions cannot see which loans they have previously inquired about.
No chance without fully comprehensive ..
In addition, banks usually require proof of fully comprehensive insurance for the application to be approved. But even if fully comprehensive insurance is not a prerequisite for the approval of the loan, the it is advisable to take out such insurance. In the event of a claim, the loan can be paid off by paying the insurance company, which significantly reduces the risk of falling into a debt trap.
Limit the term
As for the term of the loan, it should be chosen in such a way as to Useful life of the vehicle corresponds and this in no case exceeds. As a rule, a car loan should not be paid off for longer than seven, or at most ten, years.
Of course, it is also possible to terminate a car loan before the end of the term, or to cancel the loan at any time. of a premature repayment. Under certain circumstances, it may even make sense to take out a new and more cost-effective loan to replace an old one. Of course, in such a case you have to take into account that the processing fee for the loan is not repaid.
Repaying a car loan early?
Most credit institutes offer the option of paying off a car loan before the end of its term. If you unexpectedly have more money than you thought due to a profit, inheritance, bonus payment or similar, you can pay the outstanding installments all at once and thus terminate the loan early
However, by legal regulation, termination during the fixed interest rate period/loan term is at the earliest after three months and then with a notice period of three months possible.
Early termination of the contract is also allowed to the lender, if the monthly installment is not paid regularly. However, after two written reminders, the borrower must be given three months to still settle his debt.
However, banks usually charge an early repayment penalty in such a case. This is a compensation payment for the interest lost by the bank due to the early repayment of the loan.
Residual debt insurance for the purchase of a car?
With a car loan, you can also protect yourself with residual debt insurance in the event that you can no longer service the installments due. Such insurance usually takes effect in the case of:
- Undue unemployment
- inability to work
- In the event of death
How useful such insurance is essentially depends on the amount of the loan. Since car loans are usually small sums and have a short term, residual debt insurance is usually not recommended because it is a relatively expensive additional benefit.
Nevertheless, it is always necessary to individual case to check. In most cases, the costs and risks are out of proportion, but it can still make sense to take out insurance in individual cases.
Car loan comparison: find the right loan with us
With BBX.De you can easily find a cheap car loan. in the online comparison, only a few details are required to be able to compare numerous lenders with each other at a glance:
|Inputs for the car loan comparison|
|loan amount||enter the amount of the desired loan|
|term||choose the term for your car loan|
|use||specify exactly what you want to use the loan for (new car, used car, motorcycle)|
When specifying the term, you will also be shown the respective installments, which makes the selection even easier.
By explicitly selecting the purpose of the loan (new car, used car, motorcycle), you can be sure that you will be offered the loans with the most favorable conditions.
get a free credit quote
If you have found an offer that convinces you, you can obtain a free and non-binding credit offer from the provider with just a few additional details. As a rule, such an offer will be sent to you within a very short time.
If you then want to take out the offered car loan, this is now also possible in many cases from the comfort of your home on the computer. Most providers send you an online form for the loan application and offer you an online ID procedure for verification purposes.
Alternative financing methods besides the car loan
In addition to a car loan, there are also the options of balloon financing or three-way financing.
Both methods promise smaller monthly installments, but cost more overall.
With the balloon financing you pay small monthly installments. At the end of the contract period, however, a large installment will be due. Optionally, you can also make a down payment on the car at the beginning of the contract.
The monthly charges are not as high with this method as with a conventional car loan, but you have to take the high final installment into account.
The flexible car purchase – three-way financing
With three-way financing, you are much more flexible than with a car loan or balloon financing. This type of financing offers you three options at the end of the contract term:
- Payment of a high final installment, according to the balloon financing.
- Taking out a follow-up financing, to avoid the high final installment.
- Repayment of the car by the dealer with a contractually agreed buy-back price. In principle, you have leased the car for a certain period of time.
As a rule, the car loan is the more favorable method, with higher monthly installments, but the high final installment is omitted. calculate the effective annual interest rate of an alternative loan to compare prices. Nevertheless, it may make sense to opt for one of the other financing methods. Especially if you want to remain flexible, three-way financing can be a good alternative to a car loan.
Credit vs. Leasing – which method is better?
Another alternative is leasing. Here you pay monthly rates for the use of the car, but must return it at the end of the contract. This means that the car does not belong to you at any point in time.
Leasing is especially worthwhile for companies and self-employed persons, as the leasing installments can be completely deducted from tax.
For private individuals – especially at times when the effective interest rate is low – the car loan is the most favorable financing alternative. Although the rates here are higher than with balloon financing or the three-option method, the constant rates make it possible to calculate the costs easily. You can find the right auto loan quickly and easily by comparing online.
What are the advantages of a car loan??
Unlike non-purpose loans or small loans, car loans usually offer more favorable conditions. By earmarking the car loan, the credit provider can regard the vehicle itself as collateral, which minimizes the risk of loss in the event of a payment default. As a result, interest rates on car loans are usually more favorable than on conventional loans.
What does the amount of the installments for a car loan depend on??
The installment amount is usually contractually stipulated over a fixed term. It depends on how much money is needed or how much you want to pay. How expensive the car is. Generally speaking, higher installments are paid for more expensive cars.
The term over which the car loan is repaid also plays a role in the amount of the installment payments. If you want to repay the car loan as quickly as possible, you will have to reckon with higher installments.
By making a down payment of a certain amount of the sum due at the beginning, the subsequent installments can be reduced.