If you buy a car for private use, you rarely pay the full purchase price immediately – regardless of whether it's a new or used car. The partial professional use forms a further financing element: For it there is from the employer a cost refund or from the tax office tax benefits. Overall, the triad of down payment, car loan over a few months, and final payment remains a popular approach.
Balancing monthly installments and one-time payments
In the case of the car loan with down payment, the term plays a major role. From this depends on how many euros are due to the bank for each of the agreed months.
The car loan with down payment does not generally fall under the designation of balloon loan. This word refers to the credit financing with final installment. It has – similar to the one with the down payment – already a significant scale: so like a balloon.
Another term for this type of auto loan is three-way financing. It refers to the three pillars down payment, credit phase and final installment. The car loan with down payment is also an option for a leasing solution: there is no change in the division of the car price between the two one-off payments and a loan over perhaps 36 or 60 months.
The three-way financing at a glance:
With many banks and car dealers, the down payment is voluntary The phase of monthly installment usually runs between 2-4 years
The final closing installment is equal to the residual value of the car. It is often relatively high and can account for more than 50% of the purchase price. The car can then be returned or the last installment can be financed with a subsequent loan.
Other names for three-way financing are loan with final installment or balloon financing. Balloon refers to the high final installment, which can be inflated like a balloon.
But one thing is clear: Nothing works without Schufa: This is the information file that tells the lender whether you have paid your bills and installments correctly so far. There are ways to circumvent a negative Schufa information – more on this below
Advantages and things to consider about this car loan
The car loan with down payment over the individually best possible term has advantages. However, there are aspects that you should not lose sight of. The biggest advantage of this option for buying or leasing a car is the low installments that are due over the agreed months of term. But of course you don't get these euros for free, they occur at another point of such a financing option: at the high down payment or the large final installment.
This type of car loan is recommended if you have enough money for a good down payment, but can only make small installments to the bank over the months from your regular income. The closing date for this car loan with down payment you may put on a date when a savings contract comes to pay off. You may be financing this car in such a way that you, as a freelancer or entrepreneur, can count on larger income after a successful project completion. You then use this money to pay the euros for the possibly larger final invoice.
Also available is the possibility of arranging a follow-up car loan with the lender for this car loan with a down payment. Or to sell the vehicle at the end of the leasing contract and thus pay off the remaining debt. But caution is advised with the latter. This end point from the car loan with down payment requires you to factor in the depreciation of the car and possibly accident damage. Your reputation with Schufa also plays a role in the options available to you.
Car loan from the dealer – or from the bank?
To the car loan with down payment always the question arises: With which lender I take up this car loan? Finally, the amount of the down payment plays a major role in the overall financing concept up to the final installment.
The higher the down payment, the less interest accrues over the months during the term of the loan. Or you pay off the financing faster with larger regular amounts or a smaller final installment.
All these considerations around the car also arise when buying via the leasing model. It is particularly convenient for you if you take out the car loan with down payment directly with the car manufacturer or its sales outlets. The possibility to compare credit conditions of different offerers on your euro load, give away you thereby however. This also applies if you opt for the leasing option. One place to turn, of course, is your local bank, where you have your checking account and perhaps various savings contracts.
Search for special car loan lenders
It's always worth comparing with the other community financial institutions in your catchment area. Finally, for your car loan with down payment, you can also find providers who specialize in particular fields. These banks are available for the car loan just as they are for real estate financing, for example. It is worthwhile to visit comparison portals on the Internet for this purpose. After all, with the car loan you are making a financial commitment for many months.
This is important
If the dealership or the manufacturer offer you the car loan through their banks, they also earn on the loan costs. On the other hand, if you take out the car loan through the manufacturer or the dealer, your chances of getting discounts increase. You will be even bigger if you also take out the car insurance with the car dealer. With all the anticipation of the new car, however, don't lose sight of the details of the financing: the car loan amount, the months of the term, the interest rates, the "fine print"! Only this together shows you how many euros the car loan with down payment really costs you.
The foreign loan is always a solution
The car loan with down payment is possible even if the Schufa information is not so favorable. In this case, you're likely to have trouble getting a car loan with a down payment at one bank or another – locally and online. However, this Schufa information may be outdated and may not reflect your current financial capacity. Then you request a correction from Schufa – and this is done if you prove that you meet the requirements for a car loan. Then the car loan is also possible again in Germany.