Car Loan for Financing Car Purchases at Car Dealerships

car loan - borrow for car purchases

Car loans are a typical mortgage loan, that is, a loan that is entirely intended for financing a particular item. The lender has security in the car itself, and in the same way as one can easily say that the bank owns a house with a mortgage loan until the last installment is paid, the car dealer / creditor also has a right in the car until it is fully paid. See for further editorial

Car loans are a convenient way to finance the purchase of a new or used car. It is important to know that the loan can only be used to finance purchases from a car dealer. If the car purchase is to be done privately, you can instead take out a regular blank loan .


Car loan – a short guide

Car loan - a short guide

The car loan can finance the price tag for a new or used car with up to 80%. The remaining 20% ​​the buyer must pay on their own. It can be done with saved cash, replacement of car or via another consumer credit. The requirement for cash input comes mainly from the fact that a car, regardless of whether it is new or used, loses a portion of its value as soon as it rolls out of the car dealer and then quickly loses further in the resale value. In order for the creditor not to have a collateral that is less than the actual value of the car, an initial buffer is required in the form of the borrower’s cash contribution.

As with any type of loan, it is important to check which loan is most beneficial for you before you sign the loan. There are several good sites online for car loans – interest rates and offers , and you can take a look around before you decide. The factors below are well worth taking into account when looking for the loan that suits you best.

Car loans are paid in between a couple of years up to twelve years. During the term, repayments and interest shall be paid on an ongoing basis. The interest rate on a car loan is normally slightly lower than for a private loan without any security whatsoever, but the difference is never particularly great. The length of the repayment period is mainly determined by the value of the car. Of course, it is always possible to repay extra whenever you want.


To apply for a car loan

To apply for a car loan

If you meet the basic conditions (read more below) you can apply for a car loan at the car dealer. Normally, the process is simple and you can take out the loan directly in the car salon and then drive home with your new car the same day. One prerequisite, however, is that you can pay the cash contribution directly with an exchange car or with cash.

You can also apply for a car loan online in advance. To apply, you go to the website of your bank or any other lender that offers car loans. It works in principle in the same way as a loan promise for a home purchase, with the difference that the loan promise for the car loan can be turned into a concrete car loan immediately after you have decided which car you want to buy.


Conditions for car loans

Conditions for car loans

A car loan does not differ significantly from regular blank loans when it comes to the basic terms. The lowest possible age is usually 20 or 21 years and the borrower must have a declared annual income. Payment notes are only accepted by certain creditors, and if loans with a payment note can be approved, the interest rate will rise.

It is important to know that car dealers / creditors only rarely approve car loans if the car’s value is less than SEK 40,000. For very large car loans, for example SEK 300,000 or more, co-applicants or guarantors may be required.


Our best small loans

credit companies Frog Tail
loan Amount SEK 40,000 – SEK 1,000
Term 3 months – 3 years
Cost 1395 kr
credit companies Cash Buddy
loan Amount SEK 25,000 – SEK 3,000
Term 1 year – 5 years
Cost 492 kr

Our best private loans

credit companies AXO Finance
loan Amount SEK 600,000 – SEK 5,000
Term 1 year – 15 years
Interest 3.50% – 24%
credit companies Bank Norwegian
loan Amount SEK 600,000 – SEK 5,000
Term 1 year – 15 years
Interest 4.99% – 43.98%

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