There are many good reasons to consider buying a new car. Be it that the successful driver’s license test wants to be rewarded by purchasing the first own vehicle, or that the family has grown so that the purchase of a new car takes into account the increased space requirements.
But maybe there are also economic arguments that speak for a new purchase. It is common to all that a new car is a purchase that is usually not financed from equity. Because even if the buyer has the money for his new car from his savings, the money cannot be used for other meaningful and important investments.
But what can you do if you can’t find the money for the longed-for new car or if you want to save together in the long run?
When does a car loan make sense?
With a car loan, a bank provides the money for the purchase of the vehicle from the car dealer. A service charged by credit companies with interest that varies depending on the type and duration of the repayment contract. The basis for this is usually proof of regular income.
If a contract is concluded with the bank, the borrower, ie the car buyer, is registered as the first owner of the car. There is therefore no loss of value for the vehicle due to the number of its owners. In addition, the buyer is listed as the owner of the car, unlike in a leasing contract, which usually names the leasing company as the owner.
However, the lender can request that the car be assigned as security for the term of the contract, which means that the vehicle letter will be handed over to the lender during the period of car financing.
You can differentiate between different loans:
- the installment loan mentioned above, with constant monthly installments
- The balloon loan, which is also called “three-way financing” or final installment loan. It is similar to a leasing or rental agreement with low monthly installments and a high final installment. The vehicle is usually purchased after the final installment, or another loan may be taken out at favorable terms to finance the final installment.
How does the loan amount come about?
It is calculated from the cost of the vehicle, the interest of the credit company for the amount of the loan and the term that the contract should have. These can be between 12 and 180 months. There is also a processing fee in some cases. All in all, the sum of the loans then results.
So it turns out that despite all the enthusiasm, loan financing should be adjusted to your income situation.
A down payment can also significantly reduce the monthly installments. In addition, there are often offers for an end-of-life vehicle that is traded in by the dealer. It is important to check the value of the vehicle carefully and not to get involved in the first offer. Used cars often reach a higher sales value on the open market than would have been offered by the dealership of the new car.
Where can I get a car loan?
There is an unmanageable number of loan providers in the area of car financing. A comparison therefore makes sense, if only because the conditions are very different. Here is an example of a selection of providers.
GoldShare Bank Austria has specialized in the area of consumer finance, it offers two different financing models, the purchase loan (installment loan) or the residual value loan (final installment loan). Credit and budget calculators should help you make the decision.
Tip: Negotiate when buying a car with the car dealer
Another step should be to become a car dealer. Usually, the car dealers work with house and manufacturer banks, which provide cheap loans at low interest rates and tried and tested service. This usually goes very smoothly and should problems arise, a contact person is easy to reach. However, caution is required with the processing fee, which can be very high in some cases (eg 3% of the total) and thus make the purchase price, which is low due to the apparently low interest rates, more expensive.
Car financing – well advised at the house bank
Another possible lender would be your own house bank. It can grant the borrower a cash loan, in which the money is paid out directly in cash. Although these loans are often subject to higher interest rates than the loans from the manufacturer banks, car dealers often give cash payers additional discounts, which however depend heavily on their own negotiating skills.
Important: Compare loan offers for the car purchase exactly
Whichever way you choose, the most important thing is not to borrow too hastily. The effective interest rates of the car banks can be very high, so that loans with lower interest rates are definitely available on the free market. At the same time, an extensive credit check on the amount of interest is made by numerous independent credit providers. The criteria for creditworthiness are often not clearly clarified.
It is therefore worthwhile not only to take the time to select the vehicle type but also for the financing.