Car loan: calculation examples, tips & loan comparison

It is best for consumers to apply for a car loan at a bank, not through the car dealer or the manufacturer. This way, new and existing customers retain the opportunity to save a lot of money on car financing. Who actually writes and advises here? 

Apply for a car loan: Here’s how!

Apply for a car loan: Here

In three simple steps, consumers can apply for a car loan at

1. Compare loans and provide information

Use the online calculator for a loan comparison and provide the following information: desired loan amount, desired term and purpose – in this case: car purchase (menu item “Auto”). In the following short application process, you will be asked to provide your personal information (name, address, etc.). This information is necessary so that it can be checked, among other things, under what conditions a loan can be granted.

The online car loan calculator then displays numerous offers that are available to those interested. The auto loans are graded according to the effective interest rate, i.e. the amount of the loan costs. The cheapest car loan is always at the top, the second cheapest at second place, etc. The advantage of the effective interest rate: The value includes all loan costs, not just repayment and interest, but also any final installments. This means that financing that consists of different cost factors can also be compared! It makes no difference whether a final installment has to be paid for a car loan and not for another.

2. Receive offers and select car loan

Next, you will receive suitable car loans by post or email, which you can apply for directly. Since you have already given your basic information in the previous step, you can be sure that you will generally receive the conditions mentioned.

Within a short time, a specialist for car loans from our cooperation partner Lite Lender will contact you by phone. Together with you, he will check whether all the necessary information has been provided and whether other car financing may be even cheaper. If necessary, the expert will also assist you in compiling all the necessary documents.

Borrowers who fear that there may be problems approving their car loan will benefit from the loan expert. Because he knows the market for car loans inside out and can therefore tell which provider the prospects for approval are particularly favorable. This not only saves time and nerves, but also ensures that there are no unnecessary rejections from a bank. An official rejection of a specific loan offer can have a negative impact on the credit rating! And this in turn means that the chances of making another loan request decrease again – regardless of which bank the request was made to.

Please note: It does not matter which car financing you choose for the remuneration of the loan experts. So you can be sure that the specialist will advise you only in your sense.

In the third and final step, you apply for your car loan.

3. Submit documents and register receipt of payment

Together with your loan expert, you have now ensured that:

  1. You have found the really cheapest offer and
  2. You have all the documents you need to manage your car loan.

Submit the documents by post or, if necessary, personally in a bank branch, confirm your identity briefly during the identity check and wait for the decision from the bank. If your car loan is approved, you can quickly see the amount received on your account.
Take out a car loan – it’s that easy!

✔ Compare car loans
✔ Receive offers and choose car financing
✔ Apply for a car loan and register receipt of payment Please note: You will receive a car loan if you have sufficient creditworthiness. If you have any problems with the bank, please contact one of our car finance specialists – if necessary, before you apply. The specialist recommends a bank where your chances of getting the loan are particularly good.

What is special about a car loan?

What is special about a car loan?

An important factor in the pricing of banks is the so-called default risk. So the banks are trying to determine how likely the loan will not be repaid. This applies to all types of financing, including car loans, of course.

Basically, the lower the likelihood that the bank will remain at its expense, the lower the costs for the borrower.

The advantage of a car loan is that the car is deposited with the bank as security. In an emergency, the bank can sell the vehicle and use the proceeds to pay the outstanding credit costs. This significantly reduces the risk of default for the bank! And the borrower therefore gets significantly more favorable conditions with a car loan than with financing where no security has been deposited.

Purpose vs. free use Car loans are called loans with earmarking. This means that the purpose for which the money is spent is determined. With a car loan, this is the car purchase. Financial institutions often only offer financings with earmarkings if the object of finance (here: the car) can be deposited with the bank as security. However, this is not the case for a trip or a craftsman’s bill, for example. If the consumer now wants to pay for a trip or a craftsman’s bill, this usually only works with financing without a specific purpose. And this is usually more expensive, because in an emergency the bank cannot sell the object of the financing to pay open credit costs. In the case of a car loan, the borrower delivers the vehicle documents to the bank. From a legal point of view, the bank is the owner of the vehicle for a car loan. This ensures that the bank can easily sell the vehicle in the event of a loan default.

What loan amounts are possible?

What loan amounts are possible?

Each bank decides for itself from which loan amount financing is offered. At many financial institutions, the minimum loan amount is $ 1,000, but at some it is already $ 500.

The banks also set the upper limit individually. The highest possible sum is usually around 50,000 USD. Income decisive for the amount of the loan Note: The maximum loan amount a borrower receives depends heavily on their personal credit rating. And here not only the payment behavior of the past plays an important role, but also the regular monthly income.
For example, if an applicant has a monthly amount of 500 USD after deducting all fixed costs (rent, telephone bill, etc.), this consumer probably has no problem getting a car loan at a monthly rate of 150 USD. If the available amount is again 1,500 USD, the applicant has a good chance of getting a car loan even at significantly higher monthly rates. Basically, in addition to the amount of disposable income, past payment behavior plays a crucial role. So if an applicant has regularly met their financial obligations (i.e. has always paid their bills on time and in full – Credit Bureau determines this for the banks), there is a good chance that a loan will be approved. However, if there were problems here, the chances are not always favorable, even with a high disposable monthly income.

Please note when applying that additional costs may be added to the purchase price when buying a car. These can be, for example, transfer costs or registration fees. It may be worth considering these costs when calculating the car loan. Within a certain framework, the credit institutions allow the purchase price to be exceeded.

What are the requirements?

What are the requirements?

Every applicant who has sufficient creditworthiness (i.e. has sufficient income and has always met his payment requests in the past) basically receives a car loan. However, there are also a few formal requirements that may be required by law. These are usually:

  • majority
  • First residence in Germany
  • Account in Germany

In addition, there is the aforementioned demonstrable income and sufficient creditworthiness.

Note: Financial institutions do not provide financing for every vehicle. A role can e.g. B. play the age of the car.

How do I redeem a car loan?

How do I redeem a car loan?

Repaying a car loan is no different from repaying another loan. Here too, the contract between the borrower (the consumer) and the lender (the financial institution) is terminated. As with all contracts, this is only possible if both sides agree.

As a rule, the loan agreement stipulates whether and how a car loan can be canceled. If this is fundamentally possible, a so-called prepayment penalty must be paid to the bank in some cases. The payment compensates the bank for interest payments that are not paid due to the premature termination of the contract. 14-day right of withdrawal for car loans The legislator has stipulated that contracts can be revoked within 14 days without justification. This also applies to car loans. If the borrower was not informed of this option when signing the contract, the deadline is extended to a total of 30 days. Car loan installments already paid must be reimbursed.

Why is dealer financing less favorable?

Why is dealer financing less favorable?

Almost all car dealers work with a credit institution to make it as easy as possible for car buyers to purchase. If you want to buy a vehicle from such a dealer, you can also apply for financing on site – but only from the bank that works with the dealer.

The disadvantage for customers: Whether the financing that you get through the car dealer’s credit institution is actually cheap can not be said without a loan comparison. However, there is a high probability that there are numerous loan offers on the market that are significantly cheaper. Depending on the purchase price, it may be that the car buyer pays several hundred USD too much!

Save additional money with cash discount

Those who forego dealer financing and drop by the dealer directly with cash have the prospect of a hefty discount. The background: With financing or a transfer, the purchase cannot be completed on the spot. There is a small residual risk for the dealer that the purchase will not come about. That’s why car dealers often prefer cash purchases – and sometimes give a hefty discount if the buyer does a little.

A calculation example of how a cash payer discount even saves money if dealer financing offers more favorable conditions.

  bank loan dealer financing
purchase price 15,000 USD 15,000 USD
Barzahlerrabatt 10% 0%
interest rate 4.7 3.5
Monthly rate (60 months) 252.91 USD 272.88 USD
credit costs 15,174.62 USD 16,372.57 USD

For more information, read the article on the credit test.

Why are car loans from the manufacturer so cheap?

Why are car loans from the manufacturer so cheap?

The manufacturers themselves also offer auto loans to convince consumers to buy a vehicle. Of course, these car loans only apply to vehicles of our own brand – and often only for certain models and sometimes even only for certain periods (for example, only for a loan period of 72 months).

As with dealer financing, it is worth comparing manufacturer financing with current offers on the credit market. Because here too there is a high probability that there are significantly cheaper offers.

What is balloon funding?

What is balloon funding?

With balloon financing, the borrower pays comparatively low monthly installments, but has to pay a final installment at the end of the contract term.

Balloon financing is always worthwhile for car buyers if it is foreseeable that a larger amount of money will be available at the end of the contract term. This can be through z. B. an inheritance or by reselling the car.

The advantage of balloon financing is therefore: low monthly installments over the entire term; the disadvantage of balloon financing. the final installment at the end of the term.

What is 3-way funding?

What is 3-way funding?

In principle, 3-way financing works like balloon financing. The borrower pays relatively low monthly installments, but still has to pay a remaining debt at the end of the loan term. With 3-way financing, he has 3 options to choose from:

  1. He can pay the remaining debt with a final installment.
  2. The borrower can pay the remaining debt with another loan.
  3. He can leave the vehicle to the bank.

Why is comprehensive insurance sometimes compulsory?

Why is comprehensive insurance sometimes compulsory?

As with all other loans, car financing also counts: the larger the loan amount, the greater the likelihood of the bank remaining on credit costs. Because borrowers generally repay large amounts of loan over a longer period of time. And a lot can happen over a long period of time, for example an accident in which the vehicle is completely destroyed.

In the event of a total loss, the lending bank has the right to promptly claim the outstanding amount in one fell swoop. However, since most consumers cannot easily access such a large amount, the bank only grants car finance on the condition that insurance with fully comprehensive insurance for the vehicle is taken out. This is the only way for the financial institution to be sure that it will actually receive the amount in the event of a total loss.