What is the cheapest way to finance the purchase of a new car? And why is this cheaper than the alternative car financing? It is a question that most of us will ask ourselves when they look for a car loan. And when you have found a cheap car loan, you prefer to save on it too. We give you 7 tips with which you can save on borrowing for your car.
Financing the car
How do you choose the right car financing? There are three common ways to finance your car. We have listed the various options for you. We explain the advantages and disadvantages of the individual loans. We also indicate what we prefer and why.
1. Borrow money from the bank
We prefer to borrow money from the bank in the form of a personal loan . You receive the amount that you borrow for the purchase of your car directly in your checking account. Before you take out the loan, choose the term of the loan. With this you indicate in how many months you want to pay off the loan. That way you know exactly where you stand in advance. You know what you will pay per month in repayment and interest and you know how long this will take.
The car is immediately officially your property. You therefore immediately accrue claim-free years and benefit from the no-claim discount on your car insurance. Nowadays, almost all personal loans can be repaid without penalty. So if you have the option to repay some extra in the meantime, we can definitely recommend this. You thus save on interest costs again, because you have less money in your bank’s possession.
2. Car lease
The private car lease has its advantages, but also its disadvantages. We list the advantages and disadvantages. Is leasing a car the form that suits you best? Then we advise you to look at the reliable lease offer on Leasebak.nl.
If you buy a car then you have to deal with insurance, maintenance and depreciation of the car. It can also happen that the car or a part of the car breaks down when the financial total does not work out well. If you opt for a private lease, then you no longer have anything to do with this. You pay a fixed amount every month to the leasing company. This amount includes everything: all risk insurance, depreciation, motor vehicle tax, any repairs and maintenance.
The car you lease is not really yours. When the lease contract has expired, you return the car. And do you want to get rid of the contract in the meantime? That costs a lot of money. Insurers are not obliged to take over the claim-free years that you accrue during your lease period. If you have found an insurer that does, this will be a maximum of three years. The rest of the claim-free years that you have accumulated will expire. In this way you then profit less or not from a no-claim discount.
3. On installment at the dealer
Taking out a car loan with the dealer often sounds more attractive than it actually is. For example, you are offered the option: “Buy now and pay in 5 years!” In retrospect, you pay a high interest rate, or the term is a lot longer. It seldom or never happens that you are cheaper this way than when you take out a personal loan. The car will only really become yours when you have paid off the entire loan. Are you not able to do this? Then they will confiscate your car.
In the overview below, the three loans can be compared at a glance. In the left-hand column you can see the subjects on which we compare car financing.
|DEALER PAYMENT||PRIVATE LEASE|
The car is directly owned
The car is owned after payment
|The car is not owned|
|Interest||Fixed low interest, from 4.1%||Higher interest rate||
Higher interest rate
|Monthly charges||Fixed monthly charges||Higher monthly charges||
Fixed monthly charges
|Duration||Fixed duration||(Required) longer duration||
(Required) longer duration
|Extra repayments||Additional repayments possible||Extra repayments not possible||
Extra repayments against payment
|Damage free years||Immediately build up claim-free years||Immediately build up claim-free years||
Take a maximum of 3 claim-free years
Save on your car financing
We give you 7 tips that can help you save on your car financing. As you have just been able to read, our preference for financing your car is a personal loan from the bank, followed by a car lease. Our tips are in line with this advice.
- Choose the right financing for the car
First of all, it’s up to you to find the right financing for your car. You can include our advice to choose a personal loan in your consideration, but ultimately you decide. After all, you know what best fits your (financial) situation.
- Determine the duration of the car
When you choose to take out a personal loan to finance the car, it is important to match the payment period with the expected use of the car. By this we mean the following: if you expect to drive this car for three years, it is wise to set the term of the loan to (up to) three years. Is the term of the loan at five years? Then you will have to pay back part of the loan for five years, which means that you will have to pay off the loan for two more years than you own the car.
- Calculate the monthly charges
When you decide to buy a car, the purchase costs are not the only costs you incur. Once you have the car in your possession, you will incur even more costs. Such as insurance, road tax, maintenance and fuel. Make an estimate of what you will spend on the car per month. On the basis of this total amount you can determine the amount for which you want to take out a loan. And then you can also estimate whether you can miss this amount every month, as long as the term of the loan lasts.
- Do not borrow more than necessary
Our advice is not to borrow more for the car than is really necessary. It is also useful and important to make an estimate of all costs. How much do you think you have lost in total? Borrow that amount and no more. If you borrow more, you will also have to repay more plus the corresponding interest. In addition, the value of a car drops quickly as you drive it around for a while.
- Borrow and insure
If you have bought a nice car, the question is whether you also want to insure it. When you buy a car with car financing, we recommend that you insure the car. The costs can be high when you drive damage to your car. And when you drive the car total loss and it is on the demolition, you not only want to have a loan that you have to pay off. We recommend that you carefully compare the providers before choosing a car insurance policy. Choose a car insurance policy with suitable coverage and the lowest premium.
- Take the depreciation into account
Once you have purchased a car, it will be worth less every month. Are you buying a new car? Then you write off the first years in particular. Now you can choose to pay extra in the meantime. This way you keep the loan equal to the debit. And do you decide to sell your car within the repayment period? Then you pay off the rest of the car loan more easily when the amount is no longer that high. You can then use the money that you receive for the car to repay the loan immediately. This prevents you from paying off a loan for a car that you no longer own. If you manage to pay off extra in the meantime, that also has another advantage. You pay the interest costs for less than when your loan lasts months longer.
- Choose the right lender
Finally, the most important thing to do when you want to apply for a loan for your car: compare. Compare the lenders well. There are many providers and that can work to your advantage if you know which provider suits you best. The difference between the most expensive and cheapest loans can amount to 700 euros per year. Ultimately, you want a loan with the best conditions and the lowest interest rates. The best conditions are for everyone personally. Therefore, don’t just rely on what others say, but read and examine the conditions yourself.
What do you pay attention to when you compare car loans
As we have stated before, you can finance a car in different ways. You can buy the car on installment, borrow money from the bank or lease a car. We prefer a loan from the bank.
Choose the correct loan form
But then there are different forms of borrowing: personal loan, revolving credit or a mini loan. Borrowing for the purchase of a car is the cheapest when you opt for a personal loan. After taking out a personal loan, the full amount is directly in your account. At the same time you can buy the car from the car dealer and you have it officially in your name. Building up damage-free years also starts in this way from the first day that you drive your new car. The car can no longer be taken from you in any way.
Once you have decided to go for the personal loan, you will discover that there are so many lenders offering a personal loan. Never immediately choose the first provider that you come across. Now you have come to the point that it is important to start comparing car loan providers. Pay attention to the following points:
- The term of the loan
When is the loan paid off? Is this within the time you expect to drive? If not, it is wise to opt for a shorter duration. This is to prevent you from paying off while you no longer own the car.
- The interest
What is the annual interest rate, including all costs? Calculate what the interest including any additional costs will be on an annual basis. This way you can easily compare with other car loans.
- The validity period of the quotation
Have you found a loan with an interesting interest rate? Then also check how long the interest in your quote remains valid. Low interest rates can jump up again the following month.
- The insurance policies
Providers usually try to link insurance to the loan. Consider seriously and consider whether you really think you need this insurance. If you do not seem to need them, but if they are included in the loan, you will pay for nothing.
- The repayment
The repayment will consist of the part of the loan to be repaid plus the interest. How much will you pay per month? Do you expect to be able to pay for this as long as the term of the loan lasts?
Borrow with a negative BKR registration
Do you have a negative BKR registration in your name and do you prefer a car loan for a loan? Then you can opt for a mini loan. A mini loan is a relatively small loan of up to 1500 euros. When you apply for the loan, you can expect the money in your account the same day. The big advantage of a mini loan is that it can be requested by anyone. So do you have a negative BKR registration in your name, because circumstances have failed to make your payments on time? Then you still have the option to request a mini loan.
This also applies to people without a permanent contract or payslip to show at the bank. You can easily request the mini loan online. This does not require all kinds of paperwork that must be requested when applying for a personal loan.