In order to find a suitable loan for a car, customers offer a wide range of financing options. In particular, the market for car financing is hotly contested, which is why thanks to intensive search cheap loans for the car of choice can be found. In principle, two ways can be distinguished, both of which are provided with their advantages and disadvantages: financing via normal commercial banks and automobile banks. The most important features and a few helpful hints will be described below.
Car financing at the house bank
Almost every bank also offers a loan for a car as part of its financing offers. The conditions are within a manageable framework, but should nevertheless be compared exactly (not least for every credit without exception applies).
Bank loans offer a large, often decisive advantage over car loans: they allow you to achieve cash discounts when buying a new or used car. A factor that should definitely be considered in your own calculation, if you have to choose between a loan from a normal commercial bank and a car bank.
The loan for a car is usually cheaper to have than a normal installment loan of comparable amount. This is primarily due to the type of collateral, the reservation of title. After the purchase of the vehicle namely the registration certificate Part II (formerly called car letter) is sent to the financing company for safekeeping, which de facto becomes the owner of the vehicle. Only when the car loan has been fully paid off does the borrower obtain ownership of the purchased vehicle. The advantage: lower target and effective interest rates.
Financing via a car bank
Car banks are particularly suitable when it comes to a loan for a car. Financed, depending on the offer, new and used cars. Most major automakers have such a group-owned bank to offer car financing to their customers. An important feature are the conditions: Autobank finance, especially in terms of interest rates, cheaper than normal commercial banks.
As a rule, the customer has several credit options to choose from, but this can also be dependent on the selected model. Here it is particularly important to ensure that the selected vehicle can also be financed on the terms that meet personal preferences, should the individual financing options differ from one model to another.
A very popular loan for a car, which is almost always found in auto banks, is the final installment financing. In addition to the usual down payment, a higher final installment is agreed, which brings with it a decisive advantage: the installments remain rather low during the term, which allows the customer greater financial flexibility through less burden. The final rate itself is dealt with differently at the end of the term, with normally three options to choose from.
On the one hand, the installment can simply be paid in full, the loan can be repaid and the ownership of the vehicle can be purchased. However, it is also possible to arrange follow-up financing for the final installment, which can extend the repayment term by several months or years. The last variant is the return of the vehicle. However, this only works if a return with the dealer at the beginning of the term was also agreed. If this is the case, the Autobank will pay the final installment while the customer can choose a new one. This variant is particularly suitable for customers who attach importance to always driving current models with full service, which usually also the additional service and insurance offers of the manufacturer’s bank are used.