Credit for a car – advantages over leasing

A car means for many not only freedom and independence, but it is even an important livelihood, because you depend on it for the daily trip to work. When the old car breaks down, buying a car is therefore a top priority. Even young people who have just obtained their driver's license are keen to be mobile, preferably with a new car. But you don't always have enough financial reserves to finance a new car. A loan makes it possible in spite of everything. The processing of a car loan is relatively uncomplicated and simple.

With the installment loan to the dream car

The most popular form in Austria to finance a motor vehicle is the installment loan, also known as consumer credit or small loan. An installment loan is granted for amounts between 1.000 and 75.000 € forgiven. It has the following advantages:

• Lending even for small amounts.
• Well plannable due to fixed interest rates and a fixed number of monthly installments.
• Easy to finance due to low monthly installments.
• Maximum term of only 84 months or. in rare cases 120 months.
• Apart from a wage confirmation no securities necessary.
• Some banks no longer require a security transfer of title.
• Usw.

Even if for a car loan usually only relatively small sums of money are needed, you should still compare the existing offers of lenders with each other. The difference in interest rates can be significant, so if you make the right choice you can end up saving a euro or two.

Pay cash at the dealership

The great advantage of this car financing is that you can appear before the dealer like a cash payer. If the seller can count on the entire amount right away instead of a down payment, he is usually willing to sell the car to the customer at a lower price. Ideally, the discount is so high that you have the cost of the interest back in it. This is how you save money.

The advantages of the car loan compared to leasing

In Austria, almost every third car is leased. The system is simple: you pay monthly installments like a kind of rent and at the end of the term you have the option to buy the car for the remaining residual value. Compared to leasing, however, buying a car with credit has significant advantages:

• You are actually the owner of the car from the moment you buy it, while you are not the owner when leasing it.
• With leasing, you do not own the car, but you still bear the risk.
• When buying through a car loan, you are not bound to any contractually agreed mileage, d.h. there is no mileage limit.
• One is not obligated to the conclusion of a comprehensive insurance, nevertheless this is absolutely recommended at least for the first years.
• There is often the possibility of an early redemption to provide.
• It does not have to be taken out with a partner bank of the car dealership. You have the freedom to choose which bank you want to make a financial commitment to.

Sign the loan agreement, fasten your seat belt and off you go!

Financing with a car loan is not uncommon. Many people take advantage of this option, because the banks usually offer fair conditions and the offers are clear and customer-friendly. Even if you have no previous experience with taking out a loan, you need not shy away from it. The short terms and low monthly amounts can be planned well. Nevertheless, before taking out a loan, you should inform yourself in detail about the current options and compare the respective conditions with each other, so that you can get the most out of your loan and thus also out of your car.

More information

A car loan is a loan with which a private person finances the purchase of a car. The car loan is usually repaid in regular monthly installments, including interest, over several years. It is suitable for anyone who wants to buy a car but cannot pay for it all at once. Since the car loan usually has to be repaid over a small period of a few years, there is no high risk associated with it. Many people lease a vehicle instead of financing it themselves via a car loan.

But this is not necessarily the cheaper option. Similar to real estate, the car belongs to you after the loan has been repaid in full. This means you can dispose of the car as you wish and also sell it. All this is not possible when leasing a car. A leased car may only be advisable if you know you will need the car for a short period of time or to bridge the time until you can pay cash for your own car.

Where to take out a car loan?

The car loan is a special form of credit, which is often offered by banks as a special form of credit. Some banks have subsidiaries that deal exclusively with the granting of car loans and car leasing. Some credit institutions work closely with certain car manufacturers. Some car manufacturers have their own financing banks. You offer the purchase of a car and the car loan as a package. In addition, it is possible to take out a car loan directly with the car dealer. Overall, the interest rates on the car loan, unlike the real estate mortgage, rather favorable. Because often the car loan is an important argument to be able to sell the car at all.

Repayment in monthly loan installments

The most common form of car loan is a down payment with subsequent prearranged monthly installments during a predefined period of time. This makes car financing transparent for the buyer. In addition, he can adjust to what costs are incurred monthly. Another way to finance the car through a car loan is the balloon financing. Here, too, there is a previously agreed monthly installment payment during a certain period of time, including a down payment. However, the down payment is not made at the beginning but at the end of the credit period.

Some people then sell their car to be able to finance the final installment. To be able to take out a car loan, you need to offer collateral. The most important security for the purchase of a car, as well as for all other loans, is a regular income. The car itself can also serve as collateral. In addition, life insurance or savings are considered as collateral for the granting of a car loan.