A car is also necessary within the family. Especially when customers live outside the city in the suburbs, even shopping without a car is a stress test.
However, very few consumers can pay for a car in cash and look for a car loan from a bank or car dealer. In addition to the bank, the car dealership is also a good contact for a car loan.
The credit that car buyers choose depends not least on the creditworthiness of the customer. The classic installment loan has its advantages as well as financing through the dealer.
If you want to know more about bad credit dealerships, just visit our site now
Customers should compare credit before making a credit request. This shows the best provider that is at the top of the list displayed.
The borrower only has to enter the loan amount and the term and can see at a glance the amount of the loan installment that he has to pay each month. The customer can then submit the loan application directly via the website of the selected provider.
The customer is also free to ask his or her house bank for a car loan from a bank or you can take the alternative option like bad credit dealerships. Experience has shown that bad credit dealerships can offer better conditions.
The loan comparison shows not only the amount of the loan rate but also the effective interest rate. This should be in the customer’s focus anyway since it shows all the costs of a loan.
Customers should know at the interest rate that this is not relevant for all customers. Since interest is usually calculated on the basis of creditworthiness, only the customer who has good creditworthiness receives a low-interest rate.
Free special repayments and installment freezes are also part of a cheap car loan from a bank or car dealer.
The bank loan or the dealer loan
If customers inform themselves before making a loan request, they will often find that the car dealer offers better loan interest from the house bank. On the other hand, an installment loan from the bank can be used to claim the cash discount.
This reduces the necessary loan amount and thus the interest burden.
The example shows :
If you apply for a 30,000 USD loan from the house bank with an annual interest rate of 5%, you can assume that the charge of a good 3131 USD is cheaper than for the dealer who offers an effective annual interest rate of only 2%. This saving comes from a cash discount of 15%.
Customers should know that the effective interest rate is the decisive interest rate. This shows all credit costs.
The nominal interest rate, on the other hand, only shows the pure interest rate.
The car loan from the house bank
For many borrowers, the house bank is the number one contact. Customers can avail themselves of a classic installment loan or a special car loan. Both types of credit show advantages and disadvantages.
The installment loan is repaid in constant monthly installments. In addition, the loan amount can be freely used. The currently favorable interest rate level makes an installment loan a cheap car loan from a bank or car dealer.
The special car loan is also a good credit model. The disadvantage is that the loan amount can only be used to buy a car.
The advantage is that the bank rewards the customer with favorable conditions. Because the bank has the vehicle letter as collateral and thus reduces its risk.
However, the car remains the property of the bank until the loan is paid.
The car loan from the dealer
Some car dealers offer their customers 0% financing for the purchase of a car. The loan from the dealer is also very convenient.
The customer chooses a car and is provided with the right loan. Regarding the interest rate level, it can be said that traders often offer unbeatable low-interest rates.
Especially when a new car is bought. Car manufacturers want to boost the sale of their cars. In addition to the installment loan, customers can also get three-way financing from the retailer, similar to balloon financing.
With this financing, the customer pays very low installments during the term of the loan, but in the end, he has to pay the large final installment. This can be paid in cash or paid for through further financing.
Advantages and disadvantages of three-way financing
The advantage of this car loan from a bank or car dealership is obvious. The rates are extremely low during the loan period.
This financing is advantageous for customers who can dispose of a larger sum of money at the end of the term (life insurance, savings contract). This type of financing is also chosen by customers who do not yet know how to proceed with the car at the end of the term when buying their car.
The customer can return the car to the dealer. However, he may incur additional costs.
For example, if the agreed mileage has been exceeded or if the car is damaged.
Don’t forget the cash discount
A car loan from a bank or car dealership can be financed by the bank as well as the dealer. If the customer opts for the bank loan, he can act as a cash payer at the dealer.
It is not uncommon to get a discount of up to 30%. This reduces the loan amount and reduces the interest burden.
In general, however, the total costs should make the decision about the type of financing.
Requirements for a car loan
If you want to buy a new car, you have to be able to pay for it. The banks, therefore, check the creditworthiness of the customer.
This is where income is scrutinized. It should have an attachable portion.
Permanent employment without a fixed-term contract is also important. The positive credit bureau is very important.
There are many banks that do not grant credit if the credit bureau is negatively affected. A loan from abroad could be the solution for these customers.
However, the maximum loan amount there is only 7,500 USD.