Car loan without interest – interest-free or prefer to save?

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Car loan without interest – 0% financing

Car loan without interest - 0% financing

In order to increase sales, many car banks offer their customers 0% financing. What initially turns out to be particularly cheap is not so. Car dealers are obliged to process the financing of a car through the respective car bank. That means if an Opel is bought, the car will be processed through the Best Bank.

Or a VW, but then the Lite Lender handles it. In order to increase sales, some banks offer 0% financing at certain intervals. Many consumers resort because they believe that this is the best way to finance their car. Considering no interest and no fees, that’s a good deal.

The contract will then be signed. The customers should ask themselves the question:

What does the car bank actually earn now?

Car loan without interest – eyewashing the car banks

Car loan without interest - eyewashing the car banks

No bank in the world is giving away anything and certainly not car banks. The calculation is very simple. Banks receive the difference between 0% financing and standard market interest rates from the manufacturer and the dealer. This means that the trader pays for the interest.

Which in turn means that he earns less. Therefore, a customer who uses the 0% financing will hardly get a discount. For the car buyer, the result is that he buys an expensive car that has no interest, but he often foregoes a high discount. Before customers opt for 0% financing, they should do everything.

The calculation should be made:

Can a car loan over 30,000 USD spread over 60 months without interest, be cheaper or not. The cash payer discount should not be lost sight of.

Car loan without interest – up to 30% discount possible

Car loan without interest - up to 30% discount possible

Consumers should know that the list price for a vehicle is high for many manufacturers. This allows discounts or discounts of up to 30% to be granted. Incidentally, this is not what we say, but the SZ based on a study. Afterwards, cash payers collect an average of about 30 percent discount.

Those who offer high discounts will boost their sales. However, not every car buyer receives a high discount. After all, that would be a good 9,000 USD discount with a loan amount of 30,000 USD. For the customer, this means that they do not need a loan amount of 30,000 USD, but only 21,000 USD.

If a car buyer now finds a bank with a cost of less than 9,000 USD, the offer of 0% financing would have been beaten. Before customers decide, a credit calculator should be used beforehand.

It can be used to determine exactly which bank loan can top the dealer’s offer.

Car loan without interest – large selection

Car loan without interest - large selection

The focus is not just on saving when taking out a loan from a branch bank or a direct bank. Customers should always keep in mind that the cash payer effect applies to many retailers. The bank can also test several loan offers for a car loan. Car buyers should also know that this 0% financing is often only offered for a certain time and is only offered for certain models.

So if you opt for a car loan without interest as a cash loan, you can freely choose from which dealer you buy your vehicle and, above all, you can also choose your preferred model.

The car loan without interest – the types of financing

The car loan without interest - the types of financing

If manufacturers offer 0% financing, the monthly rates increase in most cases. This, in turn, prevents customers from being able to put anything aside or severely restricting their consumption behavior. If you only pay a small deposit or none at all, you pay forever on the car. Extremely cheap rates also attract many borrowers.

Car buyers receive these if they opt for financing with a final installment. Only the interest is paid over the entire term, but in the end the high final rate is due.

This financing is interesting for customers who are currently short on cash but can put something aside for the final installment at the same time. Customers who can just pay the installments with ach and noise should not choose financing with a final installment.

Car loan without interest – the lender

Car loan without interest - the lender

Anyone who has opted for a cash loan can use the house bank as their first point of contact. Before that, however, the negotiation should be conducted at the retailer to find out how much the cash discount is.

Accordingly, less is required than the loan amount. The house bank could also be the better lender if customers are in default. Then the bank could offer a deferral of payments. Experience has shown that direct banks are not that accommodating.

Nevertheless, car buyers can obtain a loan offer from a direct bank. Since these banks usually have the better conditions, the customer could present the offer to their house bank and negotiate accordingly.

Car loan without interest – credit rating must be right

Car loan without interest - credit rating must be right

Anyone interested in a new car must have a certain credit rating. After all, banks have nothing to give away. Before the loan approval is made, the bank will check the borrower’s income. It should be so high that there is an attachable portion.

In addition, there must be a permanent position, which is not limited and does not include a trial period. The credit bureau is very important. This should not contain any negative entries because this could result in the customer not receiving a loan. The risk of default appears too high to the banks.

If banks do not have sufficient creditworthiness, they require additional collateral. Then, for example, the vehicle letter may be deposited as security. This then remains the property of the bank until the loan is paid.