Type of financing: bank loan and installment loan

Car financing is by no means unusual these days, as interest rates for a corresponding financing rate have dropped extremely in recent years. This is an advantage for the customer, because he has more possibilities to compare the conditions. Although it seems quite convenient to carry out the financing directly from the car dealer, a car loan from an external bank has numerous advantages. The car purchase can be carried out via the classic installment purchase, but going to the bank is sometimes even cheaper.

Rigid offers from the car dealer

Rigid offers from the car dealer

Certainly, some people will note that buying an installment from the car dealer is equivalent to financing from the bank, but this view is simply wrong. The fact is that car financing through the dealer is presented to the customer in a very rigid and inflexible manner, since the car dealer is usually in cooperation with a partner bank and, accordingly, only this one offer from the partner bank will be available to the customer. However, this offer does not necessarily have to be the cheapest option for the future vehicle owner, since he has hardly any possibility of comparison. An extremely important effective credit comparison, which is fundamental for a purchase of the size of a vehicle, is simply impossible with financing through the car dealer.

More flexibility for the customer

However, the framework conditions are different when buying a car with a car loan from an external bank. Due to the fact that the Internet provides a very good overview of the financial market, the future car owner can find the cheapest research for himself and accordingly get his desired vehicle model more cheaply. Very cheap interest rates are sometimes available for a car loan because the bank’s credit risk is considered to be extremely low. However, this is because the vehicle to be financed acts as security even at the bank.

With a car loan from an external bank, the customer also has another advantage over the car dealership: he acts as a cash payer and accordingly has a much better negotiating position in terms of discounts and extras. Even if the car dealership’s car financing seems extremely advantageous at first glance, it often restricts the customer when negotiating. Special requests or special discounts are difficult because the dealers only offer the financing at favorable conditions for very selected models, mostly in the basic version. With a car loan through an external bank, the customer also has the advantage that he can arrange his car loan flexibly with regard to repayment options, special repayments and the like. This is not automatically the case with financing from a car dealership.

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