Car purchase: installment loan compared to dealer financing

If you are thinking of getting a new car, you can also get real bargains from car dealers this year. As before, most manufacturers and the retailers associated with them continue to pass high discounts on their new models to potential buyers. However, there is always the question of how you can actually get the highest discount.

It remains unchanged that cash payers in particular can usually get the highest and therefore the best discounts from car dealers. Anyone who can put the sum of the final purchase price on the table in cash is in an excellent negotiating position and can thus achieve a discount of up to 20 percent on the purchase price. A savings that can pay off to finance the planned cash payment using a classic installment loan.

The installment loan has decisive advantages over dealer financing

Many retailers also advertise with apparently attractive financing models, but these need to be considered with particular attention. Because dealer financing is much less attractive than an installment loan and the resulting cash payment option. Why is this so? With dealer financing, the installment loan offered for the purchase of the vehicle is already heavily subsidized. As a result, generally available dealer discounts are more or less clear.

In plain language, this means that the room for negotiation between the dealer and the prospective buyer is significantly narrower than with a possible cash payment. This means that the cash payment is also worthwhile if the purchase amount is to be financed through an “external” installment loan. In addition, installment loans have the general advantage that the loan terms can generally be chosen freely. A flexibility that is not given in most dealer financing, because there they are often fixed from the outset. Is it time for a new car? But how to finance? By installment loan and cash payment or via dealer financing?

No installment loan without prior comparison

If you want to use an installment loan to buy a car, you should carefully compare the products of different providers. There are clear differences between the individual loan offers, particularly in terms of credit terms and flexibility. A large number of credit institutions in Germany offer so-called final installment financing for their offers for a cheap car loan. This is a form of installment loan that leaves a balance at the end of the term, the so-called final installment. This gives the borrower the opportunity to lower his monthly financial burden in the form of a lower repayment amount. The monthly budget for the payment of the accruing loan installments is thus significantly relieved during the loan term.

At the end of an installment loan with a final installment, it is then up to the borrower to decide whether the higher final loan installment due at that time – for example, with the sale of his car – should be paid or financed. With this form of installment loan for car purchases, it is also important to note that special repayments can be made to the bank at any time without any prepayment penalty.

Post navigation

Leave a Reply

Your email address will not be published. Required fields are marked *