Few buyers get around whether a new or used car, a loan for the car. The financing models range from balloon loans to leasing. The contribution takes a closer look at vehicle financing. Recommendations for private and business vehicles are given.
The loan for the car – buying a new car.
When buying a new car, the most important thing for many people is to avoid high rates. The balloon credit provides the answer to this financing request as a loan for the car. The purchase amount is practically divided into two large parts. The first part is served during the first installment payment phase. The second part must then be paid as a final installment. Depending on the contract, this can also be financed through a new installment loan. However, anyone who pursues this plan must also make sure that the contract guarantees continued funding.
If you only want to drive the latest model, the three-way financing is recommended. Like an ordinary balloon loan, only small installments are paid in addition to the down payment. At the end there is the completion rate. At this point at the latest, further financing can be decided. Alternatively, the final installment can be paid in one sum or the vehicle returned to the dealer. If you pay attention to the fact that the loss in value is balanced out, you can drive a new car every year. The down payment for the next new car is paid by the dealer when the vehicle is returned.
Financing the used vehicle.
The loan for the car is of course not uncommon for the new used one. Here, too, the dealers try to lure with balloon loans and cheap rates. However, you shouldn’t get involved with slightly older used vehicles. As with new vehicles, follow-up financing is not automatically included in the balloon loan. With older used vehicles, problems can arise when the final payment is due. Slightly younger vehicles are a welcome security for loan financing. At the time of the follow-up financing, however, the vehicle has aged noticeably. Old vehicles can hardly be used as security for the bank. Without good creditworthiness, follow-up financing could become a problem.
A loan for cars with a constant rate is more suitable. The cheapest conditions for installment loans are rarely found at a car dealer. Direct banks offer good interest rates and fair conditions. You should therefore be the first choice for the installment loan. In addition, you can still get good discounts for cash payments.
Vehicle leasing with the later purchase option.
Vehicle leasing as a loan for the car is generally only worthwhile for entrepreneurs. The leasing installments can be fully deducted as business expenses. There are also fewer problems with VAT. Individuals cannot benefit from these advantages. For them, leasing, with its restrictions on vehicle use, is rather not recommended. As a business vehicle, the maintenance contracts often included in company leasing are a real advantage. The vehicle is simply handed over for inspection or repair. Professional mobility is retained with a replacement vehicle. Like the inspection work, this service is usually included in a lump sum in the leasing contract.
If you would later like to buy the vehicle for private use, you can do so at the residual value at the end of the leasing contract. Thanks to the lease payments made, the credit for the car is then significantly lower.