That’s it, the old car is gone, the last bills are still heavy on the account and money is scarce. You won’t find a suitable alternative to the car, so a new one has to be found. No problem, think interest rates are at a low and banks are chasing dumping deals.
But – Which loan offer do I take?
Whether loans for a car, apartment or for other things: which financing offer to take? The question remains the same. A loan also means that you will be facing a financial burden for a longer period of time. It is therefore important for you to keep an eye on the total costs during the credit phase.
Three decisive factors play a role here: the loan amount, the term and the interest rate. It will surely be your wish to get through this time of financial stress as soon as possible.
Here, of course, the loan amount is decisive, the higher the amount, the longer you pay the installments. The amount of the monthly installment also determines how long you repay this loan. The interest rate shows how expensive or cheap the loan is.
Types of credit for vehicle financing
The classic form of financing is the installment loan. You borrow an amount from a financial institution and can freely dispose of it. The loan is paid back in full at the end of the term, including the interest. What to look out for with the installment loan: keep the loan amount low and the term as short as possible.
Car loan : Although the car loan is very similar to the installment loan, the car loan is earmarked and therefore cheaper in that the interest rate is slightly lower. However, car banks often recommend a balloon loan, with which you have to pay a high final rate in the end.
House bank: At your house bank you will be advised by a specialist who can have a good overview of your financial situation. If in doubt, he will advise against an expensive loan if the financial burdens affect you too much.
Direct banks: Direct banks have no branch network and can therefore save on rent and personnel costs and are therefore able to offer their customers cheap car financing with low interest rates. Which makes borrowing from a direct bank very attractive.
Direct banks also offer earmarked loans in the form of a car loan. You can use a comparison to determine the expected rates.
This is how you get a cheap loan
No matter which bank you choose, it is important to prepare well in advance. In the age of the Internet, this is easy and convenient from home.
Get several offers and compare them. Make sure that you always use the total costs when using the car loan calculator.
In addition to the loan amount, monthly installments and interest rate, additional fees and insurance would also have to be taken into account. Then select a suitable bank with the associated financing based on your personal criteria.
If you take out a loan, you should also think about an emergency. What should be considered in the event of unemployment or even incapacity to work, perhaps due to an accident or illness? Then how can the loan be repaid?
There is residual debt insurance that will pay the installments if the borrower becomes unable to work. But as a borrower you have to check these offers carefully, such insurance is usually not worthwhile for smaller loans, since the loan is generally more expensive.
With larger financing, on the other hand, it makes sense to insure yourself and your relatives with residual debt insurance.
Conclusion: You can get a suitable loan quickly and cheaply if you carefully check several offers from different banks in advance. Look at the resulting total costs: loan amount, term, interest rate, additional fees and insurance. But also think about the emergency, unforeseen events can affect everyone.