There are hardly any moments and events in our life that cannot be properly secured with the help of a loan. Regardless of whether it is the purchase of new furniture, the financing of your next vacation or the purchase of a new car: If your own liquidity is not sufficient, all of these and various other things can be implemented with the help of a tailor-made loan become.
The car loan – a popular credit option
Most of the vehicles on our roads were financed with the purchase. Hardly anyone puts the purchase price on the table in cash. On the one hand, because this is hardly possible with the often very high purchase costs of several thousand or even ten thousand USD. On the other hand, however, also because the banks and car dealerships have such excellent financing offers that it would be quite unwise not to use them.
Be that as it may – every car loan that is to be taken up is a loan with a vehicle letter. Because a car loan is a special loan that is only provided if the purchase of a vehicle can be proven with the help of the vehicle letter.
Where can a loan be taken out with a car letter?
There are three major contact points for taking out a loan with a car letter. On the one hand, this is the dealership that offers the vehicle for sale. Most car dealerships are linked to banks, which have corresponding offers. At first glance, this always seems to be the easiest way for the customer. Despite all of this, we recommend that you test further offers before you conclude any financing.
These offers are provided, among others, by the banks and savings banks in our country. Many of them specifically offer a credit with a car letter, which they simply refer to as a car loan. However, a classic installment loan can also be used, which does not require a vehicle letter and which can be designed individually.
If there are problems with the Credit Bureau and therefore no sensible financing option is possible via the traditional way, a loan from a private person could be the solution to the “problem”. With this type of loan, Credit Bureau is less important than the fact that there are sufficient funds available to repay the loan. And these can not always be recognized by a positive or negative Credit Bureau.
With a personal loan, you do not go to the bank, but look for suitable offers on the Internet. Interest rates are usually somewhat higher than with conventional loan offers. However, if you urgently need a car and can only buy it with the help of a loan, you will probably be happy to accept this little downer.
What offers are there?
When financing a vehicle, experts distinguish between three different loan options. All include the credit with a car letter, but offer different repayment methods.
The best known is the classic installment loan, which provides full financing on request. The repayment takes the form of consistently large monthly installments which, depending on the provider, have an appropriate interest rate. If all installments are paid on time, the vehicle officially belongs to the buyer and the vehicle letter is given to them.
Another financing option for a loan with a vehicle letter would be balloon financing. It is a mixture of the classic installment loan and leasing. While the repayment phase begins with very low installments, a large final payment awaits at the end of the term, which can easily amount to several thousand USD. As a borrower, you have the option of paying this large final installment in one go, or splitting it into smaller installments with the help of follow-up financing. Balloon financing is worthwhile if you are able to meet the last major installment yourself. Because then you save a lot of money because the interest for the follow-up loan is eliminated.
Leasing is the third form of financing for a loan with a vehicle letter. It is suitable for companies as well as for private individuals. With leasing, the vehicle buyer only acquires a right to use the vehicle, which is tied to a specific time specification as well as to mileage restrictions and signs of wear and tear. Leasing rates are generally higher than the rates that arise with a conventional installment loan. To do this, you can simply return the vehicle to the leasing company after the leasing period and choose a new vehicle. So if you want to use a new vehicle every few years without having to buy it, you should be able to find a worthwhile alternative to a loan in leasing.