Cheap used car financing (2020) – Here’s how to get best credit

Best credit for used cars

Best credit for used cars

Different ways can be taken for used car financing. The choices are:

  • Dedicated car loan (installment loan)
  • balloon financing
  • 3-way financing
  • Installment loan at your free disposal

Each of these financing options can be realized at the house bank, a car dealer or a direct bank with a corresponding offer if the basic credit requirements are met.

Buyers want to finance the used car cheaply without a down payment, which is why a car loan for used cars from direct banks can be a good decision, as it offers other advantages in addition to a low interest rate. This includes, among other things, that the vehicle registration document, also referred to as Part II of the registration certificate, which is usually regarded as security for the bank, can remain with the buyer. The conditions for the earmarked car loan should be designed in their entirety so that this financing is the best loan for a used car according to individual requirements. A loan with no down payment offers more flexibility. A low interest rate can depend on creditworthiness and is then not the same for every borrower. The term also determines the amount of the interest, as a general rule: low interest is achieved with a short term. The annual percentage rate includes the total cost of the loan, which is why this size is decisive in the loan comparison.

The financial situation can change. Financial bottlenecks or unexpected money blessings, everything is possible. In order to be able to act flexibly in terms of loan repayment, the free special repayment or a free early total repayment are important conditions for used car financing through a car loan.

Leasing and 3-way financing are options that give the consumer freedom of choice as to whether he wants to buy the car after the financing period or not. He can also return it to the lessor or dealer.

Used car financing with final installment

Used car financing with final installment

In principle, so-called balloon financing is an installment loan. The monthly rates are extremely low here, but a high residual rate or closing rate is agreed, which roughly corresponds to the residual value of the car at the end of the contract term. A down payment may or may not be required. Experience shows that this type of used vehicle financing also harbors risks if the borrower does not worry about paying the final installment right from the start. It is not uncommon for this to be realized through follow-up financing, which in turn causes costs. This type of used vehicle financing is recommended for anyone who either consistently saves the money for the final installment or who sets it aside directly. The vehicle can also be sold to fund the final installment from the proceeds. Then, however, the amount of the residual rate should be covered.

3 way financing

3 way financing

A used car can also be realized through the 3-way financing. This differs from balloon financing only in a few points. A down payment is definitely to be made here. The amount of the down payment also determines the amount of the final installment – The lowest costs for this used car financing result from a high down payment, a high residual rate and a short term. At the end of the contract term, the customer can decide whether to return the used car, pay the final installment in one amount and purchase the vehicle, or whether to finance the final installment again, for example through an installment loan. If you want to act flexibly and have no problem with the final installment, this used vehicle financing is interesting, otherwise it is generally more expensive than an installment loan for a used vehicle.

Finance used cars with a house bank, direct bank or car dealer?

Finance used cars with a house bank, direct bank or car dealer?

A dedicated car loan from a direct bank is shown with favorable conditions. Many dealers with used car offers also offer financing through a bank. In addition, a tailored loan from the house bank can be a solution.

Anyone who puts cash on the table can hope for a discount in the dealership, at a dealer or privately. With a car loan or installment loan without a purpose, a discount can be realized when buying a car because the money can be paid directly in cash. This saving can then be used either for the first installments or for another request.

Ultimately, the decision is made according to the individual needs and financial requirements of the consumer. If he does not want to keep the car permanently, financing via balloon loan, 3-way financing or leasing should be considered if the costs do not go beyond the scope. Otherwise, car loan and installment loan remain for free use as opportunities for used car financing. And when it comes to the question of a house bank, direct bank or car dealer, the terms and conditions of the loan agreement also determine the personal aspects. Buying a used car on credit is also a matter of price.