Calculate car financing – installment loan or car loan 2019?On October 25, 2019 by Eleanor Tomes
Calculating a car financing – that’s easy with our car finance calculator. Basically, this is a very normal installment credit calculator, but who enters under purpose ” new cars / used cars “, automatically receives special offers for auto financing with. The calculator then looks for the offer with the cheapest annual percentage rate.
But interest is not everything. Good framework conditions should also play a role in the election. Who wants more than low interest rates, learns in this post what borrowers should look for in the choice of their car bank and what alternatives they have.
If that is too complicated for you, you can simply choose our car loan test winner 2019, the Best bank. There, we liked the mix of low interest rates, good service and attractive conditions the best. And even for a car loan without credit bureau entry, there are now a number of good offers.
Normal installment loan or car loan?
A car loan is initially a normal installment loan, but earmarked for the purchase of a vehicle must be used. Because the car can be foreclosed on late payments, these loans are particularly safe for the bank. So that the borrower can not sell the vehicle without the knowledge of the bank, many lenders require the filing of Part II of the registration certificate, colloquially also referred to as vehicle registration.
Apart from that, a car loan is a normal installment loan, which means there are
- a fixed interest rate over the whole term,
- Monthly equal rates and resulting
- a fixed repayment.
This is by no means self-evident, in the case of credit lines, for example, the interest rate fluctuates and also the amount of the repayment is not fixed. In the case of real estate loans, on the other hand, it may happen that, although the repayment is fixed, but the interest rate can change and thus the rates.
So that the monthly installments are always the same, the amount of the amortization must be adjusted monthly. Because with each repayment, the remaining debt and thus the interest burden decreases. For example, if interest rates fall by 3.00 USD next month, the repayment will increase by just 3.00 USD.
What makes a good car loan?
Low interest rates are not everything, but certainly the most important criterion. But next to it, borrowers should also have a number of other conditions in mind. These are the top five selection criteria, if you want to calculate a car finance:
- Amount of the APR.
- Conditions for special payments.
- Rate changes.
- Rate breaks possible.
- Service and accessibility.
1. The annual percentage rate
The annual percentage rate is the most important criterion when calculating car finance. Mind you, the annual percentage rate, not the borrowing rate. Where the difference between the two interest rates is not as big as it once was. In fact, the annual percentage rate of charge also includes credit fees. But there are hardly any, since courts have repeatedly assessed them as inadmissible.
But there is still a difference between the borrowing rate and the APR. The annual borrowing rate is only twelve times the monthly interest rate. Many banks calculate interest rates for installment loans (and thus also for car financing) monthly. There are therefore also interest on interest, which does not take into account the borrowing rate.
At low interest rates, the difference between borrowing rate and APR is therefore often low. For larger amounts, the difference but quickly very large. This shows our example of a loan with 6.00 percent interest per month. The costs are high, for example, in the case of Dunner Bank’s emergency call. Anyone borrowing $ 100.00 for 30 days must pay $ 6.00, or 6.00 percent. With interest and interest rates, this corresponds to an annual percentage rate of 101.22 percent according to the calculations usually used.
Thus, the financial institution, which advertises with the slogan “banking with friends”, is particularly expensive. If you need money for a few days or weeks at short notice, you can save a lot of money with a call-off loan, even opposite to the dispo. Many people, however, is blocked because of insufficient creditworthiness, here are micro-credit providers such as Lexicash a much cheaper and more flexible alternative to the Munich Dunner Bank.
2. Conditions for special payments
The bill is simple: Lending rates are usually much higher than those for fixed or overnight money. That is why the savings are often best invested when it is invested in the loan repayment. A few USD should remain for emergencies on the savings account or the savings account, the rest is best invested in the loan repayment.
This has three important advantages:
- The loan is paid off faster.
- The debtor saves interest and compound interest.
- The money can not be spent otherwise.
Every early repaid USD saves interest. Because the residual debt after a special repayment is lower, less interest must be paid. This automatically increases the repayment, for example, if you prematurely redeem 500 USD, thus not only saving interest and compound interest for this amount, but even more because it repays more.
There is also a second advantage. If money is on the call money account, you are quickly tempted to spend it. Why not buy a new smartphone when there is money? Again, a premature eradication can help.
In principle, installment loans can always be repaid prematurely. This also applies if the vehicle registration document has been deposited as collateral. Unlike a real estate loan secured by a mortgage or mortgage, the general statutory provisions for consumer credit apply. Thereafter, a loan can be repaid at any time, but the bank may demand a prepayment penalty of 1.0 per cent for the early repayment of money. With a remaining term of less than one year, the compensation drops to 0.5 percent.
Some banks allow free repayments, but usually only in limited amount. In addition, special payments are often only possible once or twice a year, sometimes only a few times during the entire term. If you have some money left over at the end of the month, then get a tax refund and later have something left over from the Christmas bonus, you will benefit from multiple repayments.
If the amount of these payments is limited, for example, to 50 percent, it makes a difference whether the percentages refer to the remaining debt or the loan amount. For example, if you have borrowed 20,000.00 USD and paid back 10,000.00 USD, 50 percent of the remaining debt is 5,000.00 USD. If the 50 per cent relate to the loan amount, the debtor could even repay the entire $ 10,000.00 as a special repayment. In most cases, the amount is stated as a percentage of the remaining debt.
So debtors should pay attention to the special payment:
- How many special payments are allowed?
- How high are the payments?
- Do percentages refer to the remaining debt or loan amount?
Calculate auto financing: Are rate changes possible?
But not only one-time special payments help to repay the loan faster. Rate changes also serve this purpose and therefore should not be disregarded when comparing with the car finance calculator.
If you find that he always has 100.00 USD left at the end of the month, he can increase the installments and save so much money. And of course there is also the opposite case, it gets a little tighter, then the rates can be lowered. For example, because unexpectedly a child came to it or a secondary income was dropped. The loss of a main income, however, is usually not to cope with a rate change, who wants to protect against it needs a credit insurance.
The ability to suspend installments not only brings flexibility, it can even help save money. Namely, if in return more is paid. Who at the end of the year has some money on the money account and knows that he can suspend a rate at any time, which can easily afford a 13th monthly installment as a special payment. Does he need the money, he puts out a payment and is thus almost as flexible as if he had parked the money on the money account.
Service and accessibility
Mostly one has little contact to his bank after the conclusion of a credit agreement. Nevertheless, it is good if the service is right. This includes, for example, that employees are easily accessible, at least from Monday to Friday. Or a clear website and fair credit conditions. Plus, there are pluses when the bank offers a video-id and saves the way to the post office. This is a great advantage, especially for customers in the countryside. If the bank also offers other banking products, this is also advantageous. This makes it easier to bundle as many services as possible with one partner.
On the other hand, it is negative if the conclusion of a credit insurance is pre-set, because many debtors do not need it at all. For example, if you do not have a family and you live in a region where you can be mobile without a car, it is not absolutely necessary to protect yourself against death, unemployment and illness.
3-way financing – advantages and disadvantages
A special feature when buying a car on credit is the 3-way financing. That’s because the vehicle is being financed in three ways, namely
- a deposit,
- the repayment during the term,
- a closing rate.
Sometimes the down payment can be waived, but the high closing rate is always indicative of this type of financing.
Example: For a car worth 20,000.00 USD 15,000.00 USD will be paid. 10,000.00 USD will be paid during the term, the remaining 5,000.00 USD at the end in a large rate.
To raise the money for the final installment, the owner can take out a new loan. Alternatively, he can sell the car and pay the debt with it. The biggest advantage of the 3-way financing is that significantly lower rates are possible. There is a high risk that less than possible will be repaid, so less assets will be built. In addition, the debt is then higher and more interest must be paid in total. Finally, there is also the risk that the proceeds from the sale in the end is not enough to pay the final installment.
A 3-way financing is therefore especially interesting when either a larger amount is due soon, with which the final installment can be paid, for example, a fixed-term deposit. Or if funding would not be possible otherwise. But then borrowers should make sure that they end up with at least as much money as they put in the beginning as a down payment in the car. Who has paid 5,000 USD, at the end of the term at the sale 7,000.00 USD and of it again 4,000.00 USD for the final spend, the bottom line has 2,000.00 USD assets less, if he has not otherwise saved money.
In any case, many banks offer no 3-way financing. One of the few exceptions is VW Bank’s AutoCredit, which also allows vehicles from other brands to be financed. For used cars, a final rate is only possible if the car is not older than four years.
The best car loan 2019
Winner in our car loan comparison 2019 is the Best bank. Who wants to calculate his car financing, will find that the financial institution may not offer the cheapest interest. However, it has the most attractive combination of low interest rates and good credit conditions.
These are the advantages :
- attractive interest rates
- Special repayment free of charge at any time and in any amount
- Duration one to seven years
- Free early repayment possible
- Car registration remains with the owner
There are also a few disadvantages:
- No 3-way financing
- No loans for the self-employed (except freelancers)
- No advice on site
Behind Best bank stands one of the largest credit institutions in USDpe. Read more about Best bank and Best bank car loan here!
Car loan without credit bureau
In principle, even debtors with only medium or even slightly below-average creditworthiness in a car loan have good chances. Because the vehicle serves the bank as security. Nevertheless, it happens that credit seekers are rejected. Then there are two options:
- A loan without credit bureau
- A loan from private
Anyone who has their car finance calculated, receives in our car comparison calculator mainly offers regular banks, which always obtain a credit bureau information. Above all, credit intermediaries also offer loans without credit bureau.It is important to choose a reputable provider. These do not charge any up-front fees and make no unrealistic promises. For example, the unemployed will normally not receive a car loan.