Many consumers like to take advantage of the opportunities offered by car dealers when they want to finance their new car. Car loans are often granted by car banks on very favorable terms. However, these loan offers are usually structured in such a way that customers have to pay a deposit of 20 or 25 percent on the vehicle price if they want to benefit from the low interest rates. But that is where the problem arises, because many consumers have not saved and therefore they lack the money for the down payment. So it makes sense that a loan for the down payment could be taken out with another bank.
Anyone who makes such calculations is making a big mistake. Firstly, the auto banks also notice that a loan has been taken out for the down payment, because it is not for nothing that Credit Bureau stores all credit-relevant data. Second, they are not doing themselves a favor because they would have to service two loans as a result and are not even sure that they really saved money on this action.
Experience shows that the dealers who arrange cheap car financing through their own bank are usually not already able to grant their customers a large discount because they have to subsidize the low interest rates.
If you have no money for a down payment when buying a car, you should take out the car loan entirely from a third-party bank.
The advantages of debt financing
It is certainly true that the interest on debt financing is not as cheap as that of the car bank. But the customer now comes to the dealer like a cash payer and can negotiate the vehicle price. With a little bit of negotiation skills, it can now be possible to negotiate a relatively high discount, which more than compensates for the additional interest costs from the third-party bank. In addition, only one loan is then required and the vehicle registration document does not have to be deposited with the bank.
What to look out for when car financing
When buying a new car, consumers tend to want to buy more cars than they can actually afford. This again has to do with the fact that the car is a prestige object and is particularly popular with men as a status symbol. In order to save money when buying a car and, above all, to protect the household budget, it is better if you buy a car that you can really afford to maintain. The costs of gasoline or diesel also play a role here, and they keep increasing. Anyone who pays attention to buying a car that has relatively low consumption values saves a lot of money in the end.
The loan for car financing is okay – especially if the car is needed to get to work. But taking out a loan for the down payment is nonsense because you really don’t save anything. In any case, it makes more sense to take out external financing, and then negotiate the price with the dealer as a cash payer and thus get a high discount. The bottom line will be the calculation, because the additional costs of the interest compared to the car loan from the car bank will be offset by the estate, so that ultimately one has cheaper financing.