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The advantages of an online loan when buying a car

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Recently updated on September 22, 2023 at 07:54 am

The advantages of an online loan when buying a car

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Fancy a new car or do-it-yourself tuning with the right parts? Car love can quickly become expensive, especially with rare gems. But the investment can be worthwhile, because many cars experience an enormous increase in value. Even those who don't have a lot of their own budget can fulfill their dream of a (new) car. Interesting online loan offers make it possible, even without overpriced fees.

Finally a (new) car - that's why the loan is often a good choice

Cars - for some, simply a means to an end, to cover the way to vacation or to work. For others, a long-cherished dream on four wheels has come true. Depending on the purchase price, not all of your automotive wishes can be fulfilled because you often don't have your own budget.

For example, many car buyers give up the dream of owning their own mobile home (including the Nissan Primastar Camper in the "Seaside by Dethleffs” collection) to continue saving and treat yourself to your car or mobile home later. The result: sadness. The automotive goal is often unattainable and causes frustration. This is especially true when particularly cheap offers slip through the cracks due to the waiver. Stop! There is no need to be frustrated or worried that you will no longer be able to get a cheap offer.

If you want, you can finance a motorhome or car at favorable conditions without having to reckon with enormous (hidden) costs. This is made possible by fair loan offers, which are increasingly being provided by online banks in particular.

Online bank vs. local bank or savings bank - why are they usually cheaper?

This trend would have been unthinkable just a few years ago: the number of branch banks in Germany is shrinking rapidly. Thousands of branches of the savings banks, Deutsche Bank, Commerzbank and Co. are about to close or have already been closed in recent years. The reason: Customers are increasingly changing their orientation and opting for online or direct banks.

The reasons for this are usually: significantly lower costs for account management and loans, more flexibility, smart use, including via mobile applications. Above all, the cost factor plays an important role, because compared to the local savings banks and banks, the online banks have to generate significantly less money to cover costs.

You don't have hundreds of branches with thousands of employees and an expensive infrastructure. Commerzbank, for example, had to close more than 790 branches out of 340, and according to the bank, there will be even more in the next few years. No wonder, because young customers in particular are increasingly using the offers of the direct banks. Not only do they provide flexible account models or credit cards, they also respond even better to the needs of their customers with individual loan offers.

The advantages of an online loan when buying a car
The dream car does not have to remain a dream. With the right low-cost online loans, almost anyone can secure their individual line of credit. pixabay.com @mohamed_hassan (CC0 Creative Commons)

Auto loan: A few percentage points can make that much of a difference

At first glance, the differences in the percentages for the loan offers seem inconspicuous. But a look at the calculation shows how much difference in costs there can actually be for borrowers.

For example, if you want to borrow a net loan of EUR 20.000 for 84 months from the bank, you will pay around EUR 0,68 per month at an interest rate of 243,86%. For example, if a bank offers an interest rate of 1,38%, this amounts to a monthly charge of around EUR 249,93. Calculated over the entire term, this amounts to over 500 euros in additional costs. A stately sum that can already fill one or the other tank for exciting excursions in the new vehicle.

Tip: Auto loan with a specific purpose helps you save

The selection of loan offers is enormous, because there is not only the classic installment loan. If you take a closer look and make clever comparisons, you will find, for example, loan offers with a specific purpose. Loans that are specifically provided for the purchase of cars or motorcycles are usually much cheaper.

However, the sum paid out may only be used to buy the two- or four-wheelers. The favorable conditions are mainly due to the increased security. Anyone who buys a vehicle or motorcycle with a bank loan provides the bank with security (although usually without handing over the vehicle registration document). The security means less risk of default for the bank. Even in the (unlikely) case of insolvency, the bank could sell the car or motorcycle purchased and use it to repay the outstanding loan payments. The bank rewards the lower risk with more favorable conditions, which can affect the total costs and the monthly rate.

Finding the right car loan: This is how it works

In order to find the right car loan, the financing effort is required. Should it be Selfmade conversion, a new purchase or the purchase of a used vehicle? Will the dream of owning a motorbike or traveling in your own mobile home finally come true? The desired purchase determines the financing volume.

It is best to look out for interesting offers in advance and explore the market situation. Sometimes things have to be done quickly, especially with good used cars. Therefore, short-term financing confirmations are required. A comparison between online and local banks shows that the direct banks can usually provide a loan approval within a few minutes. However, only if the borrower is optimally prepared and has all the necessary documents and information (e.g. income information) ready in addition to the planned financing amount.

You can also take out higher loan amounts at low cost

As the overview of the banking association clearly shows, private loans are still in demand in Germany; even with an increasing trend. The main reason for this is the desire to have one's own four walls or to increase consumer behavior. Buying a car or motorcycle is still high on the wish list of many loan customers. It is not just about loan amounts of up to 10.000 euros, but also about significantly more.

Not only cheap used cars are popular, but also innovative new cars or young used, iconic classic cars and real collectors' treasures. The following of DIY car fans is also growing. Buying a cheap used car and then customizing it with parts and equipment to make it truly unique – a great but often expensive hobby. More and more car enthusiasts do not want to do without it and are treating themselves to financing to make their dreams come true. Thanks to the low interest rates of the past few years, automotive dreams have increasingly become a reality.

Long terms mean cheap rates

The higher the target loan amount, the more expensive the loan and the higher the monthly installments. The maximum term at most banks and savings banks is 84 months. A loan amount of around EUR 20.000 would amount to around EUR 230 per month with such a term. A loan amount of 40.000 euros results in a monthly loan load of approx. 570 euros with a maximum term.

However, just looking at the monthly rate is not enough when requesting a loan. The following applies: the repayment must be feasible through the net income. Before the loan is approved, the bank checks the monetary situation and includes the Schufa. Experience has shown that anyone who has a low monthly net income and has already concluded loan agreements or has to pay other monthly charges will find it difficult to get a loan commitment.

Calculating backwards: How much car can I actually afford?

So that the dream of owning your own car doesn't end before it begins, it's best to calculate carefully. The basis is the monthly net income minus the fixed expenses. What is left of it to pay off a loan installment? Be careful with the amount, because the balance should never be used 100% for loan repayment.

If 500 euros remain per month for the theoretical repayment of a loan installment, borrowers should use a maximum of 300 euros. Why is this procedure recommended? Costs for (unplanned) repairs or other expenses should always be covered by your own liquid funds. The bank will also use similar observation models when examining the loan request.

The advantages of an online loan when buying a car
Fancy DIY? Loans for the construction and conversion of automotive jewels are also available from numerous credit institutions. pixabay.com @ RyanMcGuire (CC0 Creative Commons)

The desired car is not affordable with the calculated loan amount - what to do?

Clever borrowers determine in advance how much car they could theoretically afford with the loan. Often the disillusionment comes that dream car has to remain fiction for a longer time. No reason to fade gloom, because there are different ways. Many car lovers save a few more months in order to get a little more equity to buy the car of their dreams. If you consciously calculate your leisure time expenses month after month, you can use enormous savings potential.

Another option is to look for even cheaper vehicle offers. Perhaps it is helpful to make concessions here in terms of equipment. Does it really have to be the high-end sound system in the used car right from the start? Maybe the basic equipment is enough for the time being. Later retrofits are often much easier to do with a little more budget and financial cushion.

Tip: Flexibility in color selection can save a lot of costs

Some vehicle models are particularly expensive, primarily in certain colors. Some colors (e.g. purple) are particularly cheap. Only a few vehicle lovers know this advantage, which can be decisive for cost-effective financing.

Don't worry, nobody has to deal with the actual unwanted color for a long time. There are now numerous cost-effective ways to change the color of your car or RV. Foils in different colors are an inexpensive and comparatively simple way to let the dream vehicle shine again and again in the new color spectrum. But be careful, this work should be done by professionals, because the application requires skill and routine to avoid bubbles and achieve a beautiful end result.

A wrap for a vehicle, for example, costs from 1.500 euros. The savings when buying a car in a color that you don’t want can be significantly higher. Experience shows that vehicles in purple or other lesser-known nuances are often around 30% cheaper than models in popular colours. Clever vehicle buyers know that they choose exactly these models and then embellish them with their own foil color.

The advantages of an online loan when buying a car

Of course, that wasn't the end of it!

tuningblog has countless posts on the topic Credit, financing, leasing, insurance & Co. in stock. Do you want to see them all? Just click HERE and look around. The following is an excerpt from the last contributions from this category:

After fuel and gas, now the insurance premiums are rising!

The advantages of an online loan when buying a car

Car sharing offers are constantly growing!

The advantages of an online loan when buying a car

Crash with an uninsured car from Ukraine?

The advantages of an online loan when buying a car

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About Thomas Wachsmuth

Thomas Wachsmuth - He has been an integral part of tuningblog.eu since 2013. His passion for cars is so intense that he invests every available penny in them. While he dreams of a BMW E31 850CSI and a Hennessey 6x6 Ford F-150, he currently drives a rather inconspicuous BMW 540i (G31/LCI). His collection of books, magazines and brochures on the subject of car tuning has now reached such proportions that he himself has become a walking reference work for the tuning scene.  More about Thomas

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