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Auto Financing or Car Loan in Germany
For a car enthusiast, Germany is the land of good cars and no-speed-limit Autobahns to ride them on. Therefore, it is only natural if you would want to own a car here, may it be for work or pleasure. Buying a car when you move to Germany may be one of your obvious option rather than shipping your car from home country.
This article provides information about various options for financing a car and how you get a car loan in Germany and finally able to compare between various car financing calculators.
Different options for financing a Car in Germany
There are few options for having a car in Germany, and buying may not be only one. Therefore, it might be worthwhile to check other options for getting a car in Germany. Some of the options are explained below.
1. Mobility package (Mobilitätspakete): Designed towards expats who might be on deputation or on a project in Germany, the mobility package is similar to leasing package. However, they are for a shorter period of time such as six months or a year.
2. Car Leasing or Rental: The user can lease a car for a longer period of the term, usually about 3 to 5 years. This is mostly used by professionals who are provided with the car by work, therefore allowing them to deduct the monthly costs of payment as business expenses.
3. Car Leasing with an option to buy at the end of lease term: This is a new concept where a leased car user has an option at the end of the period if he wants to pay the rest of the cost and buy the car. Ideal for users who are indecisive if they want to own the car but would like to try it for a few months before deciding to buy it.
4. Car Loan with fixed monthly payment (Ratenkauf): This is the classic type of car purchase where the person makes a basic down-payment and then a monthly payment of the loan instalment for the car.
For the first three options, you can check with the various dealers of your favourite car brands if they provide such an offer. You can also check online car sales websites such as 12neuwagen.de who are usually cheaper than the normal dealers and provides you with the costs for each model of the car for the various financing options.
How to Apply for a car loan in Germany
Approaching the dealer and discussing with him will be the easiest option as they usually have collaboration with the banks or financing agencies and will be able to get you the car financing loan and do all the paperwork. Even in the case of used cars from dealers, they will be able to obtain the loans. However, if you are buying a used car directly from someone and would want to get it financed, you will have to approach the financing institutions of banks directly. The general requirements for buying a car through financing in Germany are
- Good credit score (good SCHUFA report)
- Stable job with regular monthly income
Credit Score: As a foreigner living in Germany or a short period it is possible that you still do not have a credit score in Germany. However, this can be overcome if you are able to prove that you have a stable job and regular monthly income. For this is important that you can provide three payslips from work.
Down-payment: Usually you will be asked to make a down payment for the loan to make the car purchase upfront. The higher the initial payment for the car loan, the easier it is to get a loan, the lower the interest rate and the lesser the monthly payment. In general, the best interest rates are offered when a 20 per cent down payment is made.
Repayment duration: Depending on the price of the car, the financing can range from a period of 24 to 60 months. However, for a foreigner, it must also be considered that the residence permit has enough validity till the end of prepayment period before requesting for a loan.
Where to apply for a Car loan in Germany
Apart from the various financial institutions and banks that provide loans, there are other specialised banks and institutions which provide car financing.
Automobile Manufactures Banks: If you are buying a new car, there are specialist banks by the car manufacturers such as Volkswagen bank, BMW Bank, Audi Bank, Mercedes Bank etc which have a collaboration with the car dealers and specialize in providing car loans for their house brands. This is the fastest way to obtain a loan as the collaboration makes it easier and incentivises buying the car.
Other Options for Car Financing: If you still are unable to get a loan from any of the auto-financing institutions or the banks, then you can also try to apply for a loan through peer-to-peer lending such as Smava or Lendico. They are easier to obtain personal loans for the purpose of buying a car and the interest rate depends on your credit score. You can still obtain a loan without a credit score in institutions like Maxda, but with a higher interest rate.
Car Loan Calculator in Germany.
Below is a car finance calculator where you can compare various auto financing providers for car loans in Germany. Please note that these are general loan providers who also provide auto financing. However, there are specialist banks by the car manufacturers such as Volkswagen Bank, BMW Bank, Audi Bank, Mercedes Bank etc which have a collaboration with the car dealers and specialize in providing car loans for their house brands.
How to use the Loan Calculator
- Ratenkredit (automatically selected): Instalment Loan.
- Wunschbetrag: Desired Loan Amount
- Laufzeit: Duration
- Verwendungszweck: Purpose, select to AutoKredit (Auto Loan) as the option.
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