On the one hand, used cars have the advantage that they are sometimes much cheaper than new vehicles, but on the other hand, they claim earlier and more often additional financial resources for repairs. Who would like to finance the new old by credit for used cars, should therefore not take over with the loan or debt service. So the financing wants to be well considered and the offers compared exactly.
Which loan is suitable for used car financing
Both ordinary commercial banks and the group-owned banks of many automobile manufacturers have special offers for auto-financing. Both variants are associated with certain advantages and disadvantages, between which it must be weighed. Balancing means in this case: As many as possible compare comparable offers under the microscope and estimate enough time for a conscientious calculation. Almost every used car loan is advertised in one way or another as cheap so ultimately it is up to the applicant to deal with the terms and conditions in detail.
As is the case with standard installment loans, there are also features for used car loans that should be checked before a contract is concluded. What you usually look at first when comparing is the interest rate. Usually, two of the same are presented to the customer, namely the nominal or borrowing rate and the effective interest rate. The latter is always higher than the former, since all costs directly related to the credit have already been taken into account and taken into account accordingly. However, this does not apply to the residual debt insurance, which is also offered more and more for car loans.
In contrast to the normal installment loan, the credit for used cars is cheaper. For in car finance, the newly purchased vehicle is usually delivered against retention of title to the customer. Therefore, the registration certificate Part II (formerly known as a car letter) usually has to remain with the funding institute until the loan has been fully paid off. The advantage for the customer results from the cheaper interest rates, since the vehicle itself serves as collateral. Therefore, the conclusion of a residual debt insurance will be well considered, because whether the additional costs incurred are still justified, often appears doubtful.
Loans with normal banks have a big advantage:
Once the vehicle has been selected, the loan for the used car is approved and paid out to the customer, the customer can pay for the car in cash. Even car dealers have developed over time a special preference for cash, which they willingly express by discounts to the customer. This advantage does not arise, of course, if the loan is taken out at a car bank. On the other hand, however, there are cheaper interest rates, which at least the fact is obvious that here own calculation is quite appropriate.
However, a credit for used cars at a car bank is often limited by the fact that certain financing models only apply to the purchase of a new car. This should be checked in advance. But it is usually the automotive banks that offer their customers a special financing for a higher final installment. After the down payment, the client only has to provide a relatively low monthly capital service, resulting in a higher level of liquidity.
Only towards the end of the term the credit for used cars is replaced by the payment of a high final installment. There are still two more alternatives to choose from. Because the final installment itself can also be financed, which extends the total term of the loan accordingly. Some dealers also offer the return of the vehicle in order to completely waive the customer the payment of the final installment. Whether this is also possible with used cars, but should be clarified beforehand, because here the age of the vehicle plays a major role.