Introduction;
Car financing helps when you want to get a car with a loan. However, there are plenty of different options for financing a car, and there is no single clearly best option.
Traditional car financing from a store is common, but you can also finance a car with an unsecured loan without a down payment.
In this guide, we present different car financing and loan options. Read tips for comparing different car loans and choose the most suitable and affordable loan for you.
Traditional Car Financing – installment agreement with a car dealership Car financing:
Traditional car finance for car dealerships works in such a way that the car serves as collateral for the loan. At first, the car is officially in the name of the financing company, and you can redeem it in your own name only after paying back the entire loan.
In this case, you also need it for the car
Car installment payment, i.e. traditional car financing in a nutshell:
- Available Car financing when buying directly from a car dealership
- The financing agreement is concluded with the partner of the car dealership
- The loan will be repaid in parts to the financing company
- The car is initially in the name of the finance company
A car loan obtained through a car dealership is an easy solution if you get the car from the same dealership. For example, when obtaining financing from a private seller, you must apply separately.
If the financing is taken directly from the car dealership, it is usually not possible to tender it. It’s worth being careful not to pay too much interest.
Unsecured car loan – the simplest car loan Car financing:
Another popular option for financing a car is an unsecured car loan. Smaller car loans in particular are easy to take out as an unsecured loan, which can be applied for directly online without any additional adjustments.
An unsecured car loan is an easy financing option even if you also need a loan for new car tires or other additional purchases. In the same way, the use of an unsecured consumer credit is not limited to just a car, but it can also be applied for in other ways.
You get a standard unsecured loan directly into your account. You can conveniently pay as a cash transaction directly to a private seller or car dealership.
Unsecured car loan in a nutshell Car financing:
- You Car financing can apply for the financing you need without collateral
- The loan is paid directly to your account
- Also works well for buying a used car or buying from a private person
- Competing is easy
- The interest rate is often higher than a secured loan
- The simplest loan option
An unsecured car loan is a really easy and simple loan option. You can apply for it directly online with just a few clicks. However, the interest rate of an unsecured loan is higher than a secured loan, and the applicant’s financial situation affects the interest rate offered.
Where can you apply for an unsecured car loan Car financing?
In Finland, unsecured car loans are offered by both traditional banks and many online financial institutions. The competition between loan companies is fierce, and depending on your financial situation, it can be easy to get a loan.
There are also many sites on the Internet that specialize in tendering for loans. Through these sites, you can tender with up to dozens of banks or financial companies with one application.
Secured car loan Car financing:
A Car financing secured car loan means a traditional bank loan where something owned by the applicant is used as collateral for the loan. For example, a single-family house can be used as collateral, in which case you can get a more favorable interest rate on a car loan.
Applying for and getting a secured car loan always requires a little more. It cannot be applied for as easily as an unsecured loan, as the loan offer often has to be made at least partially manually.
It is possible to compete for guaranteed car financing, but it usually has to be done by asking for a loan yourself from several places. The bidding tools sent by the application to many places cannot necessarily be used.
A secured car loan in a nutshell Car financing:
- You can apply for financing for the car for the amount you need
- Some property or a car to be bought is used as collateral
- A secured loan is usually applied for through banks
- The interest rate is lower than in an unsecured loan
You can get for up to tens of thousands:
Car financing is typically applied for a few thousand euros. A
t its largest, Car Financing can be tens of thousands of euros, and at its smallest, around a thousand euros.
The amount of depends on both the value of the car and the down payment. At the same time, more down payment is needed for a more expensive car when applying for traditional car financing.
The type of financing chosen has an effect on the maximum loan amount that can be obtained. The maximum funding amount is also affected by the applicant’s information, such as life situation and income. Financial companies ultimately grant loans to customers based on their personal credit rating.
Bidding for is worthwhile :
Bidding for a car loan makes sense. In order to get the cheapest possible interest rate and the lowest costs, it is worth comparing different options.
If you’re applying for an unsecured car loan, bidding is really easy. There are dozens of trusted loan providers online, and applying for a loan is usually really fast. In addition, it is also possible to tender the loan through so-called tendering websites.
The competition website works so that you make one loan application, which is automatically forwarded to dozens of places. At best, you get loan offers immediately after sending the loan application and you can pick the loan that suits you best.
Down payment or not?
Typically, when buying a car from a car dealership, a down payment is always required. Even if you buy the car with financing and pay part of it in installments, you still need a down payment. The down payment can be either cash or income from the sale of an old car.
You can also get an unsecured car loan without a down payment. At best, lenders offer consumer loans up to tens of thousands of euros, so even a new car can be financed entirely with a loan.
Choose the monthly installment that suits you :
When choosing a loan, it is important to consider your own financial situation. In general, if necessary, you can apply for a loan for a slightly longer financing period if you don’t want to pay large loan installments per month.
The typical ] loan period is from 1 year to 15 years. For a longer loan period, you naturally have to pay more interest and costs, so the total cost of the loan is ultimately more expensive.
In some options, you can also choose one larger final installment for the loan. In this case, you can either give up your car and exchange it for a new one – or redeem the car for yourself by paying a larger loan amount.
You can always pay off the loan faster than agreed. This way you can save on interest costs and the total cost of the loan.
Tips for choosing a suitable monthly installment of car:
The monthly installment of car financing depends on two things: the requested loan amount and the loan period. We collected a list of tips that should be taken into account when choosing a suitable monthly installment.
- Choose the monthly installment that suits your finances – choose an amount that you can easily pay in a month.
- Also take other driving expenses into account – especially if you haven’t owned a car before, you should take into account other driving expenses as well. Maintenance, fuel, insurance and taxes – on top of just the monthly installment of the loan, there will quickly be a big pile of other expenses.
- Do not take too long a loan – time – too long a loan period is not a good option either. Remember that as the loan period increases, you will end up paying even more for the car in total.
- Take into account all expenses in the invoices – also take into account the possible last larger installment in your calculations.
Summary:
There Car financing is plenty of options. There are both secured and unsecured options available, and today it is even easier to compare different loans.
Bidding is worthwhile – whether you were getting a car from a store or from a private person. When you bid for a loan, you get the best possible interest rate and you can save a lot of money.