If you want to buy a new car, it is often the case that you do not have all the cash available for this. Then it makes sense to take out a loan to buy the car. Many car dealers therefore offer a so-called car loan with a final rate through their banks and credit institutions. This is always a sensible proposition if you can’t pay the monthly loan installments that high.
What is a car loan with a final installment?
In the case of a car loan with a final installment, the borrower agrees a loan with the bank or the credit institution at a low monthly rate with a fixed term. After the end of this term, there is still the final installment of the remaining amount to be paid. This is then usually paid by the borrower with a single payment, the loan is then repaid and the borrower is then the sole owner of the vehicle that he bought with the loan.
When paying the final installment, the borrower can still decide whether he is able to raise it as a whole. If this is not the case, a loan can also be taken out via the amount of the final installment. The final installment is then paid in total and the borrower again pays monthly installments for the new loan.
Where can you get a car loan with a final installment?
The car dealerships themselves often offer these loans to finance their customers’ new cars. The car dealerships today work with banks, where the car loan is then taken out. With this loan, which is also often called balloon financing, new car buyers often have to make little or no down payment on the new car.
How do you behave correctly with a loan with a final installment?
In order not to have to finance the final installment with another loan at the end, it is advisable for the borrower to set aside another small amount for the final installment in addition to the small amounts for the monthly installments. Because of the small monthly installments, there is no great burden and you can certainly save the same amount every month in order to then fully balance the loan at the end. In the end, this is definitely cheaper than having to take out a new loan at the final rate with additional interest and costs.