Well over 40 million private cars are registered in Germany. The majority of these vehicles were purchased through financing, not a few among them with an installment loan for car purchase. In addition to the so-called balloon financing and leasing, the installment loan for car purchase is one of the most popular financing methods. This is because this form of financing has several advantages for the customer.
Installment loan for car purchase – what are the special features?
This installment loan should not be confused with dealer financing. It is a private loan for free use, while dealer financing always relates to the vehicle in question. With an installment loan for car purchase, the buyer can act as a cash payer towards the car dealer.
With clever negotiations, you can get up to 25 percent discount. Another advantage of the installment loan as funding is that the loan is not tied to a specific purpose. As a result, the car becomes the property of the buyer immediately, while in the dealer financing the vehicle letter is deposited with the dealer and the car only becomes the property of the buyer when it is fully paid.
For whom is an installment loan suitable for financing?
This form of financing is particularly suitable for vehicles that are intended for private use. The vehicle is paid for in full at the end of the term. A private installment loan can be chosen with a long term of up to 84 months. This keeps the monthly rates low.
Comparing saves costs
The differences between the individual providers are sometimes very considerable. careful comparison is therefore highly recommended. To determine the true cost, you should compare the APR. However, it is also worth taking a closer look at the conditions. For example, many financial service providers do not allow special payments or early repayment of the loan. In order to get the installment loan for car purchase approved, the applicant must meet certain requirements. So he must have a high enough monthly income to be able to pay the installments. The lower limit is around 1,000 USD per month.
There must not be too many other financial commitments. Negative entries at credit Bureau can also lead to the rejection of the loan application. Furthermore, the applicant’s employment relationship should have existed for at least one year and be permanent. If the loan is not sufficient to buy the desired vehicle, you can also opt for a high-quality used car as an alternative solution. These are considerably cheaper than new cars, but have almost the same quality. Another saving option, which is often underestimated, lies in skillful negotiation with the dealer.