How do I finance my dream car?
Many factors are important when buying a new car today. It is best to be sporty, economical and environmentally friendly. From motorcycles to motorhomes, whether new or used, the selection is huge. But often your own savings are not enough to fulfill the dream on your own. In this case there are various financing options from manufacturer bank to leasing and to keep track of this jungle of offers there are special vehicle loan calculators.
These find the most favorable conditions, with manufacturers or independent banks and save you the long search and comparison with individual providers. You enter your data in the mask and receive the cheapest offer for your dream car quickly and clearly. In most cases, it takes less than 24 hours between acceptance and payment.
What do you have to consider?
The requirements to get a loan are different for each bank. In principle, however, it applies that you are in permanent employment and must have already ended your trial period. Proof of regular and sufficient income is just as important here as positive Credit bureau information. The type or age of the vehicle also plays a role. Within this information, the bank then decides on the amount to be awarded.
The difference between the terms credit and loan lies in the term. If the installments are repaid within four years, this is referred to as a loan and as a loan. Another point is securing your credit line. The banks differentiate here in consumer and car loans. With a so-called car loan, the vehicle documents are deposited with the lender as security.
This often gives you a higher credit line with lower interest rates, but you also have to take out comprehensive insurance. Since the car loan is tied to the vehicle, there is no way to finance additional extras such as repair costs or conversion measures beyond the purchase price.
Today there are offers not only from independent banks but also directly from the manufacturer. Before concluding a contract, pay particular attention to the effective annual interest rate, as this describes the total cost of the loan. This can result in different savings for you.
With direct financing through the car dealership, you can count on special advantages, from low to no interest or offers on special equipment. These are often tied to a specific model or campaign period and in most cases require a down payment.
When comparing offers with an independent bank loan, you should consider the cash payer discount. The savings within the annual percentage rate are often cheaper at a direct bank than at a manufacturer bank. The margin for discounts on cash payments, i.e. on the list price of the vehicle, is on average 19 percent for many dealers or models.
Another financing option is leasing. Here you are granted a right to use the vehicle and a monthly fee is charged by the lessor. At the end of the usage period, you can return the car or trigger it for a one-time payment.
What does that mean in numbers now?
Financing through a manufacturer with a loan amount of USD 20,000 and an effective annual interest rate of 3.9 percent, with a term of 60 months, results in a monthly rate of approx. USD 367, i.e. a total amount of just under USD 22,000. If you now receive a 10 percent discount on a cash payment, the loan amount is reduced to USD 18,000. With the same term and an effective annual interest rate of 4.5 percent, you make a repayment of just under 20,100 USD, with monthly installments of around 335 USD. This results in a saving of 900 USD compared to the offer of a manufacturer bank.