Many car dealers advertise car financing with particularly low interest rates. Due to the low interest rates and the current interest situation, many Austrians finance their car with a car loan or leasing.
Are leasing deals cheaper than car loans?
However, the special financing structure makes it difficult for many consumers to compare the actual costs with those of a conventional installment loan. The principle of balloon financing is simple: A large part of the total financing volume is not charged in installments, but at a closing rate that is due when due. As a result, the current monthly fees are lower.
Are leasing deals cheaper than car loans? In the case of vehicle financing over $ 2,000 and without prepayment, the borrowers pay $ 24240 at an effective interest rate of 5.99% pa for a simple installment loan with a term of 60 months. Any expenses for residual debt insurance are not included. In the case of balloon financing with otherwise identical conditions, the monthly rate can be reduced to $ 314.
After the deadline, another final installment of $ 6,600 is outstanding. In this version, the borrowers pay a total of 25440 E. This means that the balloon balloon finance costs (5440 dollars) exceed the installment loan finance costs (4240 dollars) by more than 28%. In absolute terms, this means that in the case of financing, the last day comes to 20 $ more for each day started.
This cost premium can be interpreted as the amount for the lower fee over the duration. However, the price-performance ratio with a period of 60 months does not seem to be very advantageous in this regard: The calculated monthly savings of $ 20 are offset by a current monthly liquidity advantage of $ 90. Anyone who concludes a short-term financing agreement can take more from the design of the balloon financing.
In the case of vehicle financing over $ 2,000 and without prepayment, with a duration of 24 calendar months and an annual interest rate of 6.99% pa, the borrowers pay a total amount of $ 22,488 (24 * 937 $) for an annuity loan. In the case of final rate financing, a final rate of $ 11,000 and 24 monthly installments of $ 488 each result in $ 23,712.
In comparison, this is much more than in the first calculation example with the higher runtime. Also changed over to a month, the expenditure increased significantly with 51 $. However, the use of a final sentence in this model seems quite justified, since the reduction in the monthly rate (488 instead of 937 dollars) is much more pronounced.
However, it still makes sense if an object is refinanced over a manageable period and the liquidity advantage is desired. However, an installment loan is better equipped for longer periods, since the relief over the duration is much lower and the increased expenses are hardly justified. Even if a loan is explicitly referred to as a “car loan”, this does not necessarily mean that it is cheaper than a normal installment loan.
Classic car loan
With a classic car loan, the borrower deposits the car purchased with the loan as a deposit with the battery. If you want to pay for your car cheaply with an installment loan, you should do a credit comparison in advance and pay attention to various aspects: Instead, it is almost always possible to get an installment loan without earmarked funds, which is cheaper than with comparable car loans.
On the other hand, the loan should also be flexible, ie special payments and prepayments are ideally possible without any effort. Financing a used car over a period of 6 or 7 years makes little sense if a necessary new purchase can be expected within 2 to 3 years.
For example, in the case of special car loans, balloon financing is possible, in which a large part of the loan is only due for payment at the end of the period.