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A car purchase is rarely financed with savings, but interested parties take out a car loan. To get the best deal and not to pay too much interest, it is important to carry out a comprehensive credit comparison. Different aspects such as the loan amount, the interest rate, the monthly installment, the fixed interest rate and much more must be taken into account. This article looks at the various aspects that are relevant to a car loan and explains why it is worth taking out such a loan.
The number of new registrations is constantly increasing
People in this country still love their cars. This is shown, among other things, by the fact that the number of registrations of new and used cars is constantly increasing. Statistically it takes place in March of each year an increase of about 20%. Here, the registrations of used cars increase by an average of 29,8% and that of used cars by 16,95%. Most people finance the cars that are registered with a car loan. Here they enjoy an advantage through the earmarking of the car loan.
In recent years, the type of approvals has changed noticeably. In 2018, 62,4% of registrations were petrol and 32,3% were diesel. Hybrid vehicles, plug-in hybrids and electric vehicles however, were negligible. Since then, registrations of petrol and diesel vehicles have fallen significantly. In February 2022, 34,5% of newly registered vehicles were petrol and 20,7% were diesel vehicles. Hybrid vehicles were able to record the greatest growth. They were admitted to 29,7%. The plug-in hybrids made up 10,8% and the electric vehicles 14,1%.
Lending rates are currently at a record low
One reason so many people are turning to car financing is that lending rates are at record lows. The ECB has lowered its key interest rate to zero and has been following one for many years low interest rate policy. This means that the money on the market is extremely cheap. Banks should be persuaded to grant loans and companies and consumers should take out the loans and invest. This should stimulate the economy and stabilize the euro zone.
Whoever has one these days takes out a car loan, therefore has to pay extremely low interest rates. These are on average less than 3% and are currently at a record low. With a long fixed interest rate, it is also possible to benefit from the low interest rates in the long term. Even if interest rates on the market should rise again, borrowers only pay the interest rate that was agreed when they took out the loan. Vehicles can thus be financed easily and cheaply.
That is why a credit comparison is so important before buying a car
Car dealers provide a variety of vehicles that can be financed with a loan.
If you want to take out a loan, you have to take a variety of factors into account. It is not enough just to look at the annual percentage rate of charge to be able to assess which loan is actually the best. Instead, aspects such as the term, the loan amount, the monthly installment, the fixed interest rate and much more must be taken into account. Therefore, it does not make sense to accept the first loan offer that comes along. Instead, at least 10-15 offers should be examined.
Interested parties can get a good overview of what is available on the market. This will help you to assess which are actually cheap and which only appear cheap at first glance. Here you can by no means be confused by the window interest rates. These are mostly unrealistic. Instead, the specific interest rates that would have to be paid under the individual conditions that you bring with you must be taken into account.
New and used cars are getting more and more expensive
While there is a favorable price development for loans, the purchase prices continue to rise. It means that Both new and used cars are getting more and more expensive will. In 2021, prices reached a record high and were at their most expensive ever. It is to be expected that this development will continue and that prices will increase significantly again in 2022. This applies to both petrol and diesel vehicles, hybrid vehicles and E-cars.
The rising purchase prices are due to many different factors. On the one hand, the demand for vehicles remains high. Also, the components required to build cars are sometimes scarce. That applies in particular to microchips, which are required for the on-board electronics, among other things. Also, the manufacturing cost of each brand increases, which is why they pass it on to consumers. As inflation is expected to continue rising, this trend is unlikely to reverse in the near future.
Enormous interest rate differences at individual banks
One reason why you should compare as many loan offers as possible is that there are some enormous interest rate differences at the individual banks gives. Although the interest rates are consistently low due to the low interest rate policy of the ECB, the price differences lead to sometimes considerable additional costs for certain providers. In order to avoid this, borrowers should compare a wide range of offers and select the individually best and cheapest one.
The price differences at the individual banks amount to up to 60%. This means that borrowers can save several 100€ and sometimes even 1000€ in interest if they opt for a cheaper car loan. All this makes a comparison so useful. If you have already decided on an expensive car loan, it can make sense to reschedule your debt in order to benefit from the lower interest rates. However, this is only advisable if the fixed interest rate is nearing its end, since the prepayment fees that would otherwise be incurred often equalize the cheaper interest rates.
Potential savings on a car loan
Anyone who decides on a comprehensive loan comparison can use numerous savings potential. For new cars, borrowers have the option save up to €3.700 in interest. With used cars, on the other hand, there is potential savings of up to €1.500. These values are based on loan amounts of €37.790 for new cars and €15.740 for used cars. A term of 54 months is also assumed.
However, it should be borne in mind that the interest rate itself should only be one of many selection criteria when looking for a car loan. It is equally important choose a suitable termto get a monthly rate that fits your lifestyle. Occasionally it can make sense to choose a slightly longer term in order to have a lower monthly rate and avoid financial difficulties. This increases the interest burden somewhat, but this can be bearable in individual cases.
Many people take out a car loan directly from the dealer
Many car buyers choose to take out a car loan directly from the dealership where they buy the car. This makes many tasks easier for them saves a lot of bureaucracy a. They do not have to deal with external bank advisors, but can directly access the loan offer that the respective dealer makes available to them. In this way, financing is quick and easy and you have the car available within a very short time.
However, borrowers lose a lot of diversity by doing this. They do not compare different offers, but rely on the fact that the car dealer will give them a cheap loan. That is however mostly not the case. Car dealers usually only work with a few or even just a single lender. The users are therefore dependent on its conditions and cannot compare and benefit from favorable conditions.
That is why a dealer-independent loan is worthwhile
In many cases, a dealer-independent loan is significantly more worthwhile than other forms of credit. This is because borrowers here have more control over the loan terms they get. You can compare the individual interest rates and many other loan conditions and select those that suit you and your personal ideas. In addition, you are not limited to a certain number of banks and lenders, but can make the loan comparison as comprehensive as you want.
Another advantage of dealer-independent loans is that the borrowers act as cash payers. The bank or credit institution transfers the loan amount to your account. You can withdraw the required amount and pay in cash at the respective dealers. This is mostly fine with them, which is why they provide cheap discounts when someone pays in cash. This makes financing much cheaper.
Creditworthiness plays an important role in a car loan
It should be noted that the amount of interest on the loan and the quality of the respective loan offer depend, among other things, on the creditworthiness of the borrower. If those a high credit rating own, because both their solvency and their payment behavior are excellent, they are offered favorable credit conditions. If, on the other hand, there is reason to believe that the borrowers will not pay or will not pay reliably, or that there is a high risk of default for the banks and credit institutions, they will only get mediocre to bad credit terms.
The banks and credit institutions usually obtain a self-assessment from the borrowers. This includes, among other things a household bill, which clearly lists regular income and expenses. They also get information from credit bureaus such as Schufa, where a lot of financial information about the applicants is stored. Based on this data, the lenders assess their risk of default and decide which credit terms they will make available to the respective person. It is therefore advisable to ensure that the Schufa score is as high as possible in order to increase the likelihood of getting a cheap loan.
Online comparisons are particularly easy
The online world offers numerous ways to compare loans quickly and easily. The individual providers each have their own websites and online portals on which they present their respective offers. Here can mostly First non-binding loan offers obtained will. There are also a variety of comparison portals on which different providers are presented and compared with each other. Here the comparison is usually particularly quick and easy.
In addition to the actual loan offers, other factors should also be considered. For example, is it possible to submit the application completely digitally and complete it online? It's much easier and associated with less bureaucracythan if the application has to be made on site. It is also necessary to check whether the respective banks and credit institutions offer good customer service. Various channels should be available through which borrowers can contact the lenders with questions and problems.
Conclusion
In view of the rising car prices and the extremely low interest rates on loans, it makes sense to take out a car loan with a car loan. So have interested your vehicle available quicklywithout having to accept a high financial burden. It is advisable to seek comprehensive advice before selecting a specific loan offer and to consider as many offers as possible. This increases the probability of finding the offer that best suits you and your personal goals.
