Car loans cover as the name says in different ways to finance its new – or new used car. It can either be through a bank or a finance company. A car is usually a major investment and the few that can afford to pay a car in cash. Therefore, car loans are also among the most popular loans in Danes. In addition to mortgages and mortgages, most of the cost of car loans is most common in most people’s private budget. Below you can read more about how to best borrow your car.
How can you finance your car?
There are roughly two options for financing the purchase of a car. One is to use a finance company in a loan agreement, which is conveyed by the car dealer where you buy the car. The other is to raise a car loan in your bank or at a loan company online.
Your car dealer will always recommend that you choose the first solution, namely financing through your collaborator. This can be tempting as it is clearly the easiest solution. The negotiator stands for the contact and the dissemination of the loan, and all you have to do is sign a loan agreement and it’s all in place. Before being tempted or persuaded, however, be aware that there is usually a lot of money to save on applying for a car loan elsewhere. You are fully entitled to this. There is no one that forces you to choose the financing recommended by the car dealer. Please note that the car salesman receives commission on the loan brokerage and therefore always recommends this loan option.
Wherever you have to choose to finance your car, will be up to yourself and your own judgment. However, strongly recommend that you never accept the first and best deals. Listen to what the car dealer has to offer and then take it to the bank or online, and see if you can get the same loan cheaper elsewhere. Typically, the interest rate will be lower in the car dealer’s loan offerings, but as often as the other costs of the loan will be correspondingly higher.
Therefore, it may be a good idea to look at OPOP. With OPP, your total expenses are calculated in an annual percentage, so you can easily compare loans across the board.
If you have found a car loan with a fixed monthly payment throughout the term of the loan, it is easy to compare this offer with the available consumer loans on the market. By using loan calculator for consumer loans, you can quickly set your borrowing requirement and then see which loans are the cheapest. The loans are sorted by the cheapest loan at the top, and the fixed monthly payment is stated for each loan so it is easy to compare with other offers.
Which cars can be financed?
You might wonder if it’s all cars that can be financed using a car loan. Basically, the answer is yes, but there is no doubt that newer ordinary cars between 0 and 5 years are clearly the easiest to get approved as objects for a car loan. Older, used cars that are cheap are hard to get financed with a car loan unless you are willing to make a large payment. It is said as a rule of thumb that a car costs less than DKK 50,000. It does not pay to finance it with a car loan, but instead, you should take out an ordinary consumer loan. The same applies to the financing of commercial cars on yellow plates. Here are also newer cars that are easiest to finance. If you are on the market for a luxury car or an expensive special car, it may be somewhat harder to get a car loan approval. Here it requires both you to document a very good private economy and to make a non-insignificant payment. Please note, however, that these rules of thumb concern exactly car loans. Ie Loans where the money is earmarked for the purchase of this particular car. As already mentioned, a consumer loan will often be in the same price range, and you decide on the money yourself. In that case, the loan provider does not mix in which car you buy or, in general, what you spend the money on.
So far, have only been funding cars purchased from a dealer, but how are cars purchased privately? Indeed, there is actually a large part of the country’s car dealership that takes place between private and these cars should also be financed. As a starting point, both banks and finance companies would like to provide a car loan for a used car purchased between private individuals. Here you have 4 options:
- Contact your bank and ask them for an offer.
- Compare the available consumer loans
- Let an aggregate service like LendMe or Letfinans put your car loan in a bid so that more banks bid.
- Find car loans at LendMe here
- Find car loans at Letfinans here
- Take a decided car loan
- Visit Santander Billån
- Visit Diba Billån
- Visit Base Bank car loans
Should I make a payment?
have been so small on the subject of payment, but let’s get it completely cleared whether it is possible to raise a car loan without even having to make a cash payment. The answer is yes. There is no legal indication that a car loan must be paid and there are both banks and private finance companies offering to finance cars 100% and without payment. However, as mentioned earlier, this does not apply to older cars. However, if you borrow the money through the car dealer, you will always be asked to deposit at least 20% of the purchase price as a cash payment. If you do not have these 20% right now, you can get them through a consumer loan or a micro loan.
What about the interest rate?
As with mortgages, you can also choose between a fixed-rate car loan or a floating rate loan. Again, this choice is a lot about how man is. It is about risk tolerance, temperament, and of course about private economics. If you are the kind of cautious, conservative type, you should definitely go for a car loan with a fixed rate. In this way, you are sure that the interest rate does not suddenly rise dramatically and you are having trouble paying the loan. This is most relevant if it is a loan with a long maturity, where there is greater risk of fluctuations in interest rates. On the other hand, the interest rate on fixed-rate loans is typically higher than if you choose a variable-rate loan now where the interest rate is generally low. This also means that if you are the slightly more risky type or if you take out a short-term loan, there is a lot of money to save on a variable rate car loan.
Which maturity you should choose to go for your car loan is not really a simple matter. The maturity is the time it takes you to pay off the entire loan. What is special about car loans in this regard is that a car, as opposed to eg. a house, quickly loses much of its value. Therefore, you must adjust the maturity of your car loan to suit the impairment of the car. Otherwise, you risk getting back with debt, the day your car is no longer available or you lose money if you would like to replace it with a newer model one day. It is said that a new car loses much value as soon as it runs out of the dealer. One factor to pay close attention to is how many kilometers you expect to run on an annual basis. The value of the car depends very much on both the age and the number of kilometers driven. If you expect to drive below 25,000 km. a year in a new or newer car, a car loan with a maturity of 6-8 years will be appropriate, while you will probably fall for 3-5 years if you are one of those driving more.
What other costs are there?
When looking at what it takes to take a car loan, interest rates are some of the things you’re always looking at, but in fact there are also a number of other more or less fixed costs that you can not afford. They are:
- Stamp duty to the state at 1.5% of the full amount of the loan
- Litigation fee of 1,400 kr.
- Fee for the insurance company of 750 kr.
- Bank / finance company creation fee between 1-3% of the loan amount (this may vary)
- Possibly. other minor fees
Also, remember to consider which expenses you otherwise have for your car, in addition to the loan itself. You need to have space in the budget to buy the car, but also the running costs afterwards. Remember, for example. expenses for fuel, repairs and roadside assistance.
Security for the loan
If you are going to provide security for your car loan depends much on your personal finances and how strong it is. This will typically consider your bank or loan company before granting the loan to you. If you have a strong private economy, you will not be asked to provide security for the loan to your car. However, if you are a little more economically restricted you will be asked for a collateral in the form of either an owner’s letter or a so-called property reservation. Both parts mean that the car is sold if you default on your car loan so that the creditor can get his money back. As with all other loans, it does not matter if you do not have to borrow money if your budget does not have enough air to secure the monthly repayments for the entire maturity.
What does a car loan cost?
What a car loan actually costs can actually be difficult to get a precise answer to. The individual financing companies can have widely different ways of specifying the different interest rates and costs. Fortunately, car loans also have a legal requirement to state the so-called OPP.
OPP stands for Annual Costs in Percent and is a unit of measurement that takes all costs of a given loan in the calculation of the OPP rate. This applies to both interest and various fees and charges. This gives you a directly comparable unit that indicates what a loan costs on a yearly basis.
If you would like to find the cheapest car loan for you, you can figure it out using the following method, which is comprehensive and a little cumbersome, but almost guaranteed will save you money compared to if you only accept the first loan offer from the car dealer or the bank:
- Most loan companies have an online calculator where you can see what it costs to borrow for exactly the car you want to buy. That calculation will make you all the places that are possible.
- Make sure that your loan, payout and maturity are the same for all your searches.
- You mention ÅOP down on all offers.