Buying a new car involves a significant financial outlay! Those who pay for their new vehicle in cash or via a single bank transfer can expect substantial discounts from the dealer.
However, very few Austrians have a five-figure sum at their disposal and must seek affordable financing. Both the car dealer and your local bank are potential lenders. Very favorable terms can be found at direct banks or on special internet platforms such as https://www.kredit24.de/kreditvergleich/. In addition, there are several other aspects to consider!
Car loan from the dealer or the bank?
The first financing offer usually comes from the dealer. Many car dealerships offer special conditions and lure customers with zero-interest loans. This option should be scrutinized thoroughly. Normally, the dealer usually recovers these amounts through a higher purchase price. In many cases, dealer financing ends up being more expensive than a bank car loan.
The second option is to take out a loan via a specific car loan. This is offered by both local banks and numerous direct banks. Usually, the latter can offer a car loan with better terms. They do not have to maintain an expensive branch network and employ far fewer staff. The savings can be passed on to the customers. However, anyone who needs sound advice should apply for a car loan at their bank branch.
What distinguishes a car loan from a standard installment loan?
A car loan is a special form of installment loan. The borrower borrows a certain sum, which is then repaid in monthly installments. The car loan is purpose-bound. The loan amount may only be spent on the purchase of the new car. The vehicle thus serves as additional collateral for the bank. It remains the property of the lending institution until the loan is paid off. This is reflected in a lower interest rate.
A conventional installment loan, on the other hand, is available for free use. This means that the money can be spent on, for example, a car and a vacation trip.
For whom is a car loan useful?
A car loan should be considered when the purchase of a new vehicle can no longer be postponed and the bank account does not have sufficient coverage. If money is tight anyway, the loan must remain manageable – under certain circumstances, compromises may have to be made regarding the engine or equipment.
As long as interest rates were low, many people resorted to a car loan despite having a full bank account. As a rule, these borrowers had invested their assets in such a way that the return was higher than the interest incurred for a car loan. Whether this model is still worthwhile with the current rising interest rates must be decided on a case-by-case basis.
These requirements are necessary
Banks do not grant a car loan without meticulous examination. The borrower must be at least 18 years old and have a regular income as well as a permanent employment contract. In addition, they must have a good credit rating. For this purpose, the bank obtains a credit report from the KSV (Credit Protection Association)). If this is positive, nothing stands in the way of taking out the loan.
Required documents for a car loan
Every bank has its own procedures for granting loans. Usually, however, a valid photo ID is always required. In addition, current bank statements of the checking account and proof of salary for the last three months are needed.
Different types of car financing
There are several options available for structuring a car loan. The two most common are described as follows.
Installment purchase
With an installment purchase, a down payment can be made. The remaining financial requirement is covered by the car loan. This has a fixed interest rate and is repaid in equal monthly installments. The installment loan is characterized by good predictability and is primarily suitable for drivers who want to keep their vehicle for a longer period.
Three-way financing
Also known colloquially as "balloon financing," this type of loan also involves an individual down payment. At the same time, a relatively high final installment is set. The remaining installments are therefore less significant. The final installment can be paid off at the end of the term. Then the car becomes the property of the borrower. Alternatively, follow-up financing can be negotiated to pay off the remaining amount in monthly installments.
