Here you will find our free comparison of car loans with final installment. Serious car loans in comparison.
Car title loan with closing rate online
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Car loan with closing rate comparison, calculator
Almost two thirds of all vehicles registered in Germany are fully or partially financed. This includes the financing of new and used cars as well as leasing. Car manufacturers’ banks are always coming up with new ideas on how to use different financing options to boost car sales. The battle for market share is incredible, not only in Germany. The funding is considered one of the most important means to assert yourself in this fight.
Dealer credit or bank financing?
Zero-percent financing, the first five inspections included in the price or even including taxes and insurance – the creativity of marketing strategists knows no bounds.
The disadvantage of zero-percent funding is that the maturity is kept relatively short, which means despite the loss of interest a fairly high monthly burden. On the other hand, no one can give away money, the interest rate is therefore priced into the purchase price. Who finances the dealer, has bad cards in the negotiations on the purchase price.
Who finances his car through a bank, has the advantage that on the one hand, he can adjust the duration so that he pays comfortable rates. On the other hand, he acts as a cash payer towards the trader, which in turn strengthens the bargaining position.
Leasing means that the car owner is not the owner. He must not make changes to the car without further ado and must have the inspection carried out at the prescribed workshops. As a rule, at the end of the contract period, there are discussions about the residual value with the lessor. In addition, a leasing installment incurs VAT but not a credit installment. Some banks came up with the idea of combining the best of two worlds and linking credit and leasing characteristics. Out came the car loan with closing rate, also known as balloon credit.
How does the car loan with closing rate?
The buyer considers how long he will probably use the car. Assuming that the vehicle has a purchase price of 40,000 euros, the assumed useful life is three years with an annual mileage of 30,000 kilometers. The residual value of the car after three years amounts to 18,000 euros, the final installment or balloon rate.
The buyer concludes a loan of 22,000 euros, and operates this as a normal loan. After three years, he now has three options, from which the concept of three-way financing derives:
- He puts the 18,000 euros for the remaining value on the table and drives his car from the yard.
- He enters a follow-up financing over 18,000 euros.
- He returns the vehicle to the dealer without any further obligation.
Of course, at point three there is a risk that the trader would like to use a lower residual value to obtain an additional payment. The argument may be an above-average wear of the interior, paint damage or higher than the agreed mileage.
The advantage of a loan over the lease is that the borrower is the owner of the car. He has free workshop choice and can change the vehicle. The latter naturally has an influence on the residual value. In addition, the rates are VAT exempt.