Apply for and compare to car loan? Many people still buy a car with their own saved money. That way you already save the interest. Yet this is not always the best way of working. Applying for a car loan is sometimes the best solution because of the tax benefits.
Request information about car loans
Buy a new car without applying for a car loan or financing has the advantage that after the purchase you remain debt-free and do not have to pay any interest. The disadvantages are that you have to cough up the entire amount in one go and cannot benefit from tax benefits. Who uses his car for his profession or for commuting to work can deduct his car expenses for tax purposes.
A large part of the costs are then 75% deductible. In addition to the monthly depreciation, this also includes the maintenance costs and costs of insurance and taxes. But the financing of the car and fuel costs are 100% deductible. This is of course only for the percentage of kilometers during your professional use. It is therefore often cheaper to borrow than to pay for your car in cash.
A car loan is therefore often cheaper than paying in cash, many people also focus on this. When a car loan can be found with an interest rate that is low, the monthly costs for the loan will certainly not be too bad.
Apply for a car loan at the bank
One of the places where you can take out a loan for your car is the bank. The bank advances the money for the car or part of it and you make monthly payments for this for a period of one year to 5 years, depending on the amount or your tax plan. You can borrow the full amount from a bank, possibly supplemented with an extra sum for the registration fee and insurance. With a bank loan from the first day you are the owner of your car. The rates charged by banks are not very high and partly set by law.
Nevertheless, you will notice considerable differences between the banks themselves. Always ask in your bank about your annual percentage rate and compare this with other banks. The annual percentage rate of charge will normally be higher for second-hand cars that are older than 2 years.
Which car purchases?
When you apply for a loan from the bank, the interest will be strongly determined by the age of the car. When you buy a new car, the interest will automatically be lower than when you buy a second-hand car. Some banks apply for a cheaper car loan for a car that is 3 years old at most, others only offer interesting interest rates for a car that is not older than 2 years. You will therefore have to compare car loans and see what suits you best.
Borrow money from the garage
You can also take out a loan in the garage where you buy your car. Numerous car manufacturers and garages offer promotions for this and try to lure you to their points of sale with low monthly payments. You should know that this is a completely different type of financing than offered by banks.
This is an installment sale where you are required to pay a minimum advance of 15% on the purchase price. Often the seller also remains the owner of the car until the full amount has been paid off. This is the so-called reservation of ownership. This can entail risks with regard to accidents or theft.
Read the contract carefully before signing this. Certain constructors try to lure you with loans with O% interest. This always looks attractive, but it usually just means that you get less or no discount on your car.