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For most German car buyers, leasing is not an option. If you buy a new car or a used one that you don’t pay out of your savings, use a car loan to finance your car. An editorial over at http://www.web-documentation.com/best-online-payday-loans-direct-lenders/
Here, leasing is an interesting option to afford a car because leasing also offers the option of regularly buying a new vehicle model. But leasing, which otherwise offers little advantages to private customers, is still hardly attractive to private consumers who, if at all, would rather opt for final installment financing. Germans strive for possession. If they finance, they have their own car at the end of the contract, which is getting old, but it is theirs. If they leased, they would have paid during the term of the contract, but in the end they would have nothing. Thinking is a bit wrong because not everyone who lives in an apartment has to own it. Many Germans still live for rent, and if the apartment is too small or too big for them, they move. Nothing else happens with car leasing.
What is leasing?
With car leasing, the customer is the vehicle owner and also registered in the vehicle registration document, but not the owner of the car. The car is rented for a certain time, usually 12, 24 or 36 months. A leasing installment is paid and the vehicle is normally returned to the dealer or leasing company at the end of the contract. Here it becomes very clear that leasing can be very interesting for drivers who would like to drive a new car every two or three years. If you lease your car, you don’t have to worry about selling your old car if you want to drive a new car. When the lease term ends, a new vehicle is selected and a new lease is signed.
Why a car loan is more attractive than a leasing contract
The advantage described is obvious and the question arises as to why not many more customers make use of the opportunity to lease their car.
This is because leasing has many pitfalls that scare off many consumers. Although leasing rates are generally lower than the rates for a car loan with the same contract term, this also means the residual value of the vehicle at the end of the leasing. The final installment financing comes very close to leasing. When it comes to financing the final installment, there is also the final installment at the end of the contract, which also roughly corresponds to the vehicle value at that time. With final installment financing, the vehicle owner pays an interest rate that he knows and that he can, if he wants, purchase the vehicle. The leasing companies keep secret how a leasing rate is calculated.
The normal consumer cannot understand the calculation. The leasing vehicle has its price, the dealer and also the manufacturer grant the customer a discount. The lessee makes a special leasing payment (comparable to the down payment for a car loan) and at the end of the day there is an installment that is also related to the residual value of the vehicle. To calculate how much money you pay more, the consumer can multiply the installments, then add the leasing special payment, the residual value and the discount. In total, a significantly higher amount will come out than the actual vehicle price.
Ultimately, it is always the case that leasing is more expensive than a car loan and not transparent enough for the individual. At the end of the contract term, the leasing customer has nothing. At the end of the term of a car loan, the customer has a used car that he can call his property.