A car loan is financing for a motor vehicle. If you take a look at the attractive offers on the market, you could quickly come to the conclusion that such a loan is an easy method to buy the dream car of the luxury class. However, as with any loan, the conditions should also be taken into account when financing the car. The monthly credit rate must fit into the budget and be sustainable in the long term. Therefore, it should never be too high. It is also highly recommended to compare the conditions before concluding the contract. So what do you need to know when taking out a car loan?
A loan to finance the vehicle purchase price
If the purchase price for a car cannot or should not be paid in cash, financing is generally an option. The acquisition costs are then spread over a period of several years. The purchase price is paid in monthly installments. Interest is payable on this installment payment. The car loan is a dedicated loan. This means that it may only be used to pay the vehicle purchase price. This means that this financing for a car differs from an installment loan without earmarking. The loan amount is issued in Austria like a consumer loan in dollars.
This makes the total amount including the interest very comparable. If you want to finance the purchase price for your car, you should always compare the conditions. This is because not every bank offers a special car loan in its portfolio. Nevertheless, all banks compete with each other and want to attract new customers with attractive conditions. That is why it is worth checking the conditions carefully. It’s all about
- the term in months
- the interest in percent
- the repayment amount in $
A loan calculator helps to compare the conditions in detail.
The credit for motor vehicles has these disadvantages
Due to the earmarking, car financing is not very flexible. Once the loan agreement has been concluded, the loan for the car must also be called up and used for the purchase. So there is no other use. In addition, a car loan is a payment obligation that you enter into with the bank. The amount borrowed must be repaid as well as the interest. Some lenders offer their customers additional security in the event of impending unemployment or disability. The loan can then be deferred for a few months during the term.
However, this extends the duration of the repayment. In addition, the deferral often incurs high costs in $. It must be checked in each individual case whether a credit deferral is really the solution to financial difficulties. Some banks are very rigid here, other banks are fairly customer-friendly and offer the borrower a high degree of flexibility and security. The borrower’s credit rating must be correct and allow the loaned money to be repaid. The creditworthiness is usually checked on the basis of regular income in dollars and with the help of entries in the KSV. It should not contain any information from a bank that suggests irregularities in the repayment of previous financing throughout Austria.
Focus on interest
If you want to finance a car, of course, pay attention to the amount of the costs. The costs are calculated in the form of interest and processing fees. While the interest is calculated as a percentage of the financing amount, the bank’s processing fees are listed in $. As a result, they are quite comparable in the credit comparison. A loan calculator helps to calculate the costs of financing exactly. With a good online calculator, the various levers for car loan can be compared well. With just a few entries, you can change the term and the rates to check which provider in Austria is currently offering particularly attractive conditions.
A look at interest rates is also important because the banks are in fierce competition with one another. That means they outbid each other with attractive borrowing costs to win new customers. This business works extremely well in Austria, and car loans are becoming increasingly popular, especially for paying for luxury cars. Interest rates are, by the way, quite attractive in view of the ongoing low interest rate phase, so that, in principle, even higher loan amounts with longer terms have to be repaid at acceptable monthly rates.
Leasing as an interesting variant
Leasing is an attractive alternative to buying finance. Leasing is ideal for drivers who want to change their vehicle every two to four years in order to always drive the latest model. In principle, leasing is a long-term rental. After the expiry of the term, the lessee decides whether he wants to buy the vehicle or whether he wants to conclude a new leasing contract for another car. In the case of vehicle leasing, the car remains the property of the lessor, in the case of financing it belongs to the borrower.
So if you are already certain that you want to keep the vehicle at the time the purchase contract is concluded, car financing is usually better advised. So you can negotiate higher cash payment discounts when buying. For the self-employed, however, vehicle leasing can be the better option because the leasing installments are tax-deductible in certain circumstances and reduce the tax burden.
This applies if the car is primarily purchased for operational or commercial purposes and is part of the company’s assets. Whether a vehicle leasing or vehicle financing is the most suitable alternative must always be decided in individual cases and taking into account the individual circumstances. There are attractive conditions for both variants, so that you can often afford the dream car that is out of the question when paying in cash.
Whether a vehicle leasing or vehicle financing is the most suitable alternative must always be decided in individual cases and taking into account the individual circumstances. There are attractive conditions for both variants, so that you can often afford the dream car that is out of the question when paying in cash. Whether a vehicle leasing or vehicle financing is the most suitable alternative must always be decided in individual cases and taking into account the individual circumstances. There are attractive conditions for both variants, so that you can often afford the dream car that is out of the question when paying in cash.