In addition to classic car loans, many auto banks also offer final installment financing, which is used by more and more customers. The last rate car loan with cheap rates and low rates. The balloon loan is suitable for both new and used car financing, but should be well considered due to the high completion rate and additional interest charges. Calculation of a car financing with down payment and final installment. A car loan with a final rate at the dealer has advantages and disadvantages.
Car loan with final installment – a popular form of financing
Regardless of all the crisis situations involving major automobile groups such as WW and Com. in 2017 and before, it is registering a steady increase in new car sales. The vehicles of the upper and middle classes are particularly popular with the German citizens, while the values for small cars remain relatively constant in relation to the past years – but by no means decline.
As a rule, there is only one tiny problem: the finances. Most people who want to buy a vehicle do not have the small change to pay for it in one go. Before you buy a vehicle, you should inquire about all these options, because the purchase of a car is usually not from a mayfly.
A good and popular type of automobile financing is the one with the final rate aka balloon rate, which often also simply referred to as balloon financing. A good way to conclude is a loan with a final installment or another lease rental option. But of course, a final installment vehicle financing is just a way of self-financing.
With our installment credit calculator
You can choose the right rental car for your requirements from the wide range of offers. But if you want to know more about the last installment loan or the financing of a balloon, read the guide below. It explains what a car loan with a closing rate is, what advantages and disadvantages it brings, where the advantage of leasing transactions is and when this form of credit is available.
What is the completion rate of a car loan? Car loans with a final installment are often referred to as balloon financing and, in principle, are not quite different from conventional installment loans. The name of this loan comes from the fact that you do not initially have too many loads per day, but these increase in the course of financing – similar to balloon inflation.
Also, as the title implies, the last installment at maturity is very important for this type of loan. There are three key steps in vehicle financing with a final installment: you as the borrower sign the financing contract in stage one and can reuse the vehicle immediately thereafter.
In the third stage, ie at the end of the promotion, you can either repay the usually very high final installments with a one-off payment. You can also opt for follow-up financing to fully repay the vehicle. IMPORTANT: In a follow-up financing, you must assume that the remaining tranches have a lower interest rate.
For most lenders
There are so-called 3-way loans for a car loan with a graduation rate, which is very often useful. As well as paying the last installment, you can also choose follow-up funding as described above. You can also return the vehicle to the vehicle manufacturer, but be aware that you are not the owner of the vehicle.
The following table in our guide on loans with completion rates, also referred to as balloon rates, gives you an overview of the main advantages and disadvantages of the financing method: From when is vehicle financing with a final installment suitable? Especially for people with little or no initial capital, a car loan with a final installment can be enough.
Therefore, the lower tranches are formed by paying out the same tranches for a monthly installment loan, while these constantly increase in balloon financing. Please keep in mind, however, that the financing over the entire duration is still more expensive than the installment loan, since the very high closing rates, also known as balloon rates, are subject to interest from the outset.
Possibility for vehicle financing is the leasing business
If you look at the principles of balloon financing, you will notice that there are some similarities to vehicle leasing. On the one hand, the vehicle always remains in the possession of the landlord when leasing. In the case of a last rate car loan, on the other hand, the actual owner of the vehicle after paying the balloon rate.
In addition, prepayments include the exemptions for lending and the leasing installment. If you rent a car, the automobile is returned to the seller at the end of the contract, while the purchase of a balloon requires you to drive your car yourself. Vehicle financing with final rate: A comparison is worthwhile! So, if you want to keep balloon payments as low as possible and accept a costly completion rate, traditional 3-way financing from a car dealer or a car bank is not the best option.
Rather, you have an advantage when you sign up at a standalone house bank, since the conditions here are usually clearly better. Therefore, it is definitely worthwhile to compare with our car loan calculator before taking out a loan in order to determine the best offers.