car financing options: you can pay off a used car in installments thanks to a loan.
According to data from the Federal Motor Transport Authority around 7.3 million vehicles changed hands in 2017 as a whole. Young used cars registered for the first time up to two years ago were particularly popular. So the used car market is booming. In the abundance of vehicles everyone has the chance to find their personal dream car.
That so many buyers focus on young used cars, is also reflected in the average prices of used cars. In december 2017, according to the price index of a well-known vehicle exchange, this was at 19.761 euro.
There are different forms of used car financing: with and without down payment, as a conventional installment loan (for this you can use our loan comparison), balloon loan or three-way financing.
The best financing for used cars does not exist. it must be decided according to the situation and personal preferences.
0 percent financing for used cars may sound tempting, but it’s usually not as cheap as it might first seem. Read more here.
That’s a lot of money – more than most people have in their bank accounts. For this reason many buyers resort to used car financing. With the help of monthly installments the dream car paid off little by little. Find out what you need to know about car financing in the following guidebook.
what you should consider before financing a used car
When financing a used car, it’s important to know how much money you can afford each month.
Financing used cars has become as common as taking out a loan for a new car. In principle, there are also as good as no differences between the two forms of financing.
before you decide to finance a used car, you should first find out about a few things and be clear about certain issues.
It is important above all to determine in advance, how much money you have available each month, to finance a used car with it.
Create one overview of your income and expenses. However, you should not put the difference between the two items completely into the installments. Keep in mind that unforeseen costs, such as a broken refrigerator, may come your way. Therefore you should always plan for a sufficient buffer. also keep in mind that a car always comes with consequential costs. These include, among others insurance, vehicle tax and fuel costs.
Buying a used car on installments is practical, because the purchase price does not have to be paid all at once. The tempts many buyers to choose a car that is slightly above their budget. However, with used car financing, a higher purchase price is accompanied either by higher installments or a longer term. The latter ensures that the total cost of credit increases. On the one hand, you pay interest on the used car loan over a longer period of time, and on the other hand, the conditions are usually worse with a longer term. So think carefully about, whether it might not be a cheaper model after all.
financing for used cars: these options exist
If the vehicle is used: financing a car without making a down payment is often possible.
Do you want to finance a used car?, they have several options. These are as follows:
- Conventional installment loan: either they must first make a down payment or this is omitted. Then you pay monthly installments until the end of the term of the loan agreement. After that the car is yours.
- Used car financing with final installment: this type of loan is also called balloon financing. The used car installment payment is made without or with down payment. Thereafter, as with the conventional loan, monthly installments are due. At the end of the term, a usually very high final installment must be paid.
- Three-way financing: this is the most flexible solution. Here, too, a down payment and monthly installments must be paid first. Towards the end of the contract, a decision must be made: do you want to pay the final installment, take out follow-up financing or return the car to the dealer??
The Rates for balloon and three-way financing are usually much lower than for a normal car loan. this is due to the high final installment. If you are unable to pay this, follow-up financing becomes necessary. However, the conditions are usually much worse than for the previous used car financing. Basically you can say, that a conventional installment loan is usually the most favorable solution all in all.
Used cars with 0 percent financing: what’s the catch??
New used car: thanks to financing the dream of the car becomes true.
More and more often, people who are looking for a car come across offers for an used car financing without interest, the so-called 0-percent financing. Getting a loan without having to pay interest: that sounds tempting. But is this financing really such a bargain??
Customers must first expect that the purchase price for the car will be particularly high. this plus then replaces the interest that does not accrue.
In addition, you should always study the small print. It often states that from a certain point in the term, they have to pay a fixed interest rate, which is usually much higher than the conventional level. This makes the car much more expensive, taking all costs into account, than if a normal loan had been taken out.