Many credit institutions and banks offer the classic installment loan for vehicle financing. This loan is very manageable right from the start. You don’t always have the necessary financial reserves to buy a car. In order to still be able to fulfill the dream of a new vehicle, there are other financing options besides cash payment.
How to properly finance a new car; Car financing through a corresponding car loan , installment loan or leasing is very common and popular. With the right choice of financing model , you can also create your own financial freedom. It is important to compare and weigh the various options and car loan offers well in advance.
The installment loan – stable installments, fixed term
The longer the term of the loan is chosen, the lower the monthly installments. With this form of auto financing , you have a fixed, calculable monthly amount right from the start.
Credit institutions offer the payment amount either at their free disposal or as a dedicated expense in the form of a car loan . In this case, the vehicle purchased is considered security and the interest rate may be lower under certain circumstances. The installment loan is one of the most popular forms of credit for car financing in Germany.
Balloon credit – low initial large final installment
Car banks are also happy to offer this form of credit when buying a vehicle. Here, the initial monthly installments for a certain fixed term are relatively low, but there is a large final installment at the end. The relatively low monthly charge is an advantage here, but you should also be able to save reserves for the high final rate in good time .
If this is not the case, only a mostly expensive follow-up financing can help to pay the installment. The credit costs are now increased again by the new interest.
Leasing – alternative financing
When leasing, the vehicle remains in the dealer’s possession, so you do not acquire property. The monthly leasing rates are relatively low. At the end of the leasing period, the vehicle can then simply be returned to the dealer.
However, are there any deviations from the leasing contract? B. the lessee has to pay for exceeding the agreed mileage or damage to the vehicle. These costs cannot be calculated, which is also a risk.
It is always important to carefully weigh up which financial model you should choose for car financing without getting into financial constraints. This is the only way to really enjoy your newly purchased vehicle.
With auto financing, a down payment is also very useful and reduces the loan amount and thus the loan costs.