Depending on the age and condition of the car is a loan for used cars to different amounts. The financing of a used motor vehicle is possible both through the car dealer and through an independent commercial bank. If the used car is not purchased from a dealer, but directly from the private previous owner, eliminates the financing through the point of sale inevitably.
The used car financing via the car dealer
The interest rates of the auto bank are usually not as extremely low in a loan for a used car as in the new vehicle financing. This disadvantage is partly offset by the fact that the dealer is ready for a discount on used cars rather than new cars, even if the financing is done through him.
Especially with used vehicles that have been on the yard of the dealership for a long time, a good discount can be negotiated with good negotiating skills even with used vehicle financing via the vehicle dealer.
Another advantage of borrowing for the used car through the dealer is that the acquirer must negotiate for vehicle purchase and financing with a single point of contact. In addition to the complete loan financing of the used car is often possible via the car bank and the credit agreement with final installment. This reduces the loan amount and thus the monthly installments.
If the used car buyer does not have sufficient financial assets to fully settle the loan on the agreed date, he can apply for a new loan.
The used car financing via a commercial bank
In addition to the car banks of the car dealers, independent commercial banks also offer a car loan for used cars. As with all vehicle loans, this is secured by a safety transfer of the financed car.
This is usually associated with the handover of the registration certificate Part II to the bank, for organizational reasons, individual banks refrain from financing cheap second-hand cars on this.
The transfer of the security of the second-hand purchased car becomes legally effective already with the conclusion of the corresponding agreement and not only with the handing over of the registration certificate Part II to the bank.
In a credit comparison used car buyers look to the specifications of each financial institution for the financing of the car through a car loan. For some banks, used cars may not exceed a maximum age.
If the vehicle does not meet the conditions of the respective bank for the discounted granting as a car loan, the credit agreement usually provides for the conversion into a standard installment loan. For this, significantly higher interest rates than for a used as a car loan used car loan to pay.
Regardless, some used car buyers prefer unrestricted bank credit, which is easily possible with non-expensive vehicles. They would like to avoid the transfer of ownership of their used car connected with a car loan and in some cases not be obliged to take out a fully comprehensive insurance, as is usual with vehicle financing.
The waiver of the insurance against the loss of the car due to an accident caused by the holder is possible when using a non-earmarked installment loan for the used car purchase, but not effective.
After all, it can lead to the borrower having to finance another used car after a traffic accident while at the same time continuing to service the old loan for the no longer usable car.
Leave reserves for repairs
The vehicle purchaser can choose between different durations for a used car loan, which directly affect the amount of monthly installments to be paid. Due to the fact that purchased cars are more likely to be repaired than new vehicles, it is advisable that the loan installments to be paid leave enough reserves for the repair costs.
Ideal is a loan for the used car, which allows the borrower expressly the deposit of additional repayment benefits without deduction of prepayment interest. In this case, the used car buyer uses the opportunity for special repayments if the repair costs are lower than expected.
5 tips on credit for used cars
1. Calculate deposit
In general, it can be very useful to make a down payment on the entire loan amount for a used car. This reduces the monthly costs and creates considerable scope. The amount of the down payment in advance should be calculated exactly, because this must not exceed the personal circumstances.
For this purpose, it is advisable to carry out a detailed statement of income and expenditure. Only when it is clear what the bottom line of the income remains and also the savings were taken under the microscope, can be called an exact sum.
2. Choose a financier exactly
For used vehicle financing, either the dealer or a separate bank can be the backer. Anyone who finances the trader should read the contract twice more, because of course it is clear that this tries to knock out as much as possible for itself. However, interest rates can be quite low here, which is particularly important for long-term loans.
Financing through the bank is recommended if the total cost of the loan should be quite favorable. This can be an advantage if the runtimes are kept rather short. However, it must be considered that here usually higher down payments incurred.
3. Compare offers
It is essential to compare the various offers of the banks, because used car financing is not equal to used car financing. This starts with the in-house banks of the manufacturers, because they usually lend the loans at quite favorable conditions, as they also benefit from a contract. However, it can be even cheaper if an independent bank is involved in lending.
Here it is above all the total costs, which are usually much cheaper. In any case, the Internet should be used for an accurate search, because here are usually all current products on this subject.
4. Choose the right financing
There is more than one financing for a used car. Those who want to be on the safe side choose the usual installment financing. Monthly installments are paid to the lender until the total price of the car is fully paid.
However, this is not always the best option, because it does not adapt to the living conditions. Therefore, it may be worth considering a used car lease. The rates are usually cheaper than a new car, but this is worthwhile only if the car at the end of the term to be given back. In the end, balloon financing can also help, with a down payment being made at the beginning.
The monthly installments are much lower than for all other types of loans. However, at the end of a larger final payment must be made.
5. These documents are essential
If you want to take out a used car loan, you must first have a valid ID card. For a lease, the driver’s license must be presented. Often it also plays a role, how long the borrower already has a driver’s license. As a rule, the credit information is obtained through the bank, but the trader can also demand that the borrower take care of it himself.
In addition, a copy of the employment contract and a current payroll or a bank statement should be present, the salary receipt prove. Finally, various collateral can not hurt, but then have to be proven.