These are numbers that underline how important the cars are for the Germans. There are 55 million vehicles on the road in Germany (16 percent new vehicles), and around six million cars are manufactured in the Federal Republic every year. This means that there are more than 500 vehicles per thousand German residents. More than one in two Germans owns a car and even more dream of buying one. This is usually done through a loan for a car.
What is a loan for a car?
In theory, any loan can be taken as a loan for a car unless its purpose is clearly different. But if you want to have the cheapest possible loan, you should take a so-called car loan. These are special purpose loans from banks that they issue on condition that they are really only used to actually buy a vehicle. Any other use is explicitly prohibited. Because the Germans have such a special relationship with their vehicles, practically all banks offer corresponding loans. If someone wants to have a car of a special brand, they can also contact the car bank of that special provider and apply for a loan there.
A loan for a car: the specialty of financing diversity
The special aspect of car loans, that is, car loans, is that there are more funding options than a traditional loan. So-called balloon financing, which is often also called final installment financing, is particularly popular. With this, you pay off only a fraction of the normal loan through the installments.
It is usually around 50 percent that are repaid in this way. The rest of the money is saved for the final installment, which of course is immensely high. When it comes to paying the final installment, the borrower has the choice: he can return his vehicle and repay the final installment, he can simply repay it (if he has the money) or he can also pay it via follow-up financing.
Requirements for a loan for a car
Basically, a person does not have to have any special requirements to get a car loan that go beyond the requirements for other loans. It is important that he has sufficient creditworthiness (meaning that the income is high enough) and that he does not have a negative entry in the protection association for general credit protection.
In both cases, the hurdle for a car loan is actually somewhat lower, since it is a “good” loan, since the car is used to acquire a specific equivalent for the money.