The usual form of vehicle financing consists of a down payment and monthly installments, the sum of which, including the one-off payment at the start of the loan, covers the full purchase price of the car including interest. Instead of or in addition to the special payment at the start of the contract, a final installment can also be agreed for vehicle loans.
Vehicle financing through the car dealer
A vehicle dealer offers cheap financing through the car bank when buying a new car. In some cases, this is done at extremely favorable conditions, which mainly affect vehicle models with weak sales or planned model changes. In these cases, car dealers or their banks often offer zero percent financing.
However, the corresponding vehicles can later be sold as used vehicles only with difficulty and with above-average losses, so that the acceptance of corresponding offers is particularly useful if the buyer wants to drive the vehicle himself until it is scrapped or to pass it on to his children.
A cheap car loan with a final installment is mainly offered by the dealer in the form of balloon financing. The buyer can return the car at the end of the contract period and of course then does not have to pay the final installment.
Vehicle financing through a commercial bank
A cheap car loan with a final installment can also be obtained from a commercial bank instead of from the vehicle dealer. In this case, the buyer acts as a cash payer in the dealership, so that he can negotiate a significant discount. Depending on the bank, the corresponding financing takes the form of balloon financing, which is also known as three-way financing, or with the fixed agreement of a final installment to be paid at the end of the contract.
A cheap car loan with a final installment is possible because the car buyer both hands over the registration certificate Part II to the bank and grants a lien on the financed car in the event of improper loan repayment.
Advantages of a closing rate
If a cheap car loan has a final installment and the vehicle buyer does not make a special payment at the start of the contract, he has time to save on the required final installment. Additional financing of the final installment to be paid via the bank granting the car loan or by means of an ordinary consumer loan is also possible. If both a special payment at the beginning and a final installment have to be paid at the end of the loan term, the duration of the financing is noticeably reduced compared to a classic vehicle loan without a final installment.
The main advantage of a shortened loan term for the car buyer is that they can have the car completely in the past and sell it as a used car if necessary or if they want a new car. The registration certificate Part II will be given to the vehicle buyer after the vehicle loan has been repaid in full, so that the vehicle can be sold.