There are different car loans. The car dealers offer loans to finance the car. Likewise, there is also a loan from independent banks. In both cases, it may happen that banks only grant a loan with a car letter deposit. That depends on the terms and conditions of each bank.
Car loan – what should you know?
Not everyone can pay for a car out of their own pocket. This applies to new cars as well as for used vehicles. However, one should know that there are certain benefits when applying for a car loan letter from an independent bank. Many car buyers are happy to accept the offers of car dealers for installment payments. But they lose an advantage. It is still common that there is a discount on the purchase price when paying in cash. With a loan from the car dealer this does not apply.
For the bank, the car letter is the security. If the car loan is not properly paid, then the bank has access to the car. During the repayment period, the borrower may not sell the car. This can only happen with the agreement of the bank.
For car buyers who can not pay high monthly installments, offers for the car purchase the balloon financing. The monthly installments are kept low. At the end of the term but the balance is due. That can be thousands of euros in one go. The borrower must either pay the balance or apply for a new loan with a car letter. Balloon financing carries a risk. If the borrower can not settle the balance at once and the banks refuse follow-up financing, the cart is gone.
At first glance, balloon financing may seem positive, but keep in mind that the final rate can be very high. If you are not sure whether you can afford this or if there is a follow-up financing, you should opt for another way.
The car loan is earmarked
A loan with a car letter is earmarked. If the loan amount is not only intended for the purchase of a car, then a conventional installment loan would be the better alternative. If this is requested on the Internet, no one has to fear that the purpose is questioned. At branch banks, it is still common for the bank’s adviser to always ask for the reason for the loan.
Online banks are cheaper in their terms anyway. That concerns the car loan and the installment loan. Through credit calculator on the Internet everyone will find the right loan, which can be applied for online immediately. The basic requirement for a loan is a good credit rating. Without this, every transaction is doomed to failure. The dealer banks check the creditworthiness of the car buyer before a commitment for a loan with a car letter.
Many consumers are wondering what exactly is being checked on the issue of creditworthiness. The private credit provides information about the payment behavior of the customer. In addition, the monthly budget burden is checked. General empirical values are included in the credit assessment. This information is only available to the lending bank. The loan seeker usually does not learn the reason for a credit rejection.