Credit for Used Car Purchase ower than the price of a new vehicle
Since the purchase price for a used car is significantly lower than the price of a new vehicle, some car buyers can pay the car in cash from their savings. However, most customers take out a loan when buying a vehicle, even if the car to be financed is a used car. In principle, with a loan for the purchase of a used car as well as with the purchase of a new car, there is a choice between vehicle financing through the dealer or through a bank loan that is independent of this.
The used car financing through the dealer
As a rule, the dealership offers a loan for the purchase of used cars as well as new car financing through the car bank. While some models of new cars are loaned at particularly favorable terms, the discount compared to financing on the open market for used vehicles is modest. At the same time, the dealer is ready to make larger financial concessions on the sales price if he does not have to take over vehicle financing.
Since there are naturally no list prices for used cars and the initially excellent price in today’s sales practice is always to be understood as a basis for negotiation, the actual additional discount cannot be reliably calculated by not using the cheap dealer credit. Borrowing the used car from the dealer is convenient for the customer, as he only has one negotiating partner for the car purchase and financing.
Vehicle financing through a commercial bank
The low purchase price of a used car allows many buyers to use an ordinary consumer loan as a loan for buying a used car. In this case, you do not have to provide the bank with any information about the purpose of the loan and you do not have to provide the Part II registration certificate as security for the loan. On the other hand, a discounted vehicle loan makes sense when buying a new car, since the car buyer saves money.
The same conditions apply to a discounted loan for the purchase of a used car as to an inexpensive bank loan for a new car purchase: The vehicle buyer assigns the car to the bank as credit security and thus allows it to be used if he does not pay his installments as agreed. With a few exceptions, banks require the registration certificate Part II to be deposited for the lending of used car loans, since this measure effectively prevents the car from being resold.
In contrast to new car loans, however, significantly fewer commercial banks offer a discounted used car loan. Some banks only finance used vehicles on special terms up to a specified vehicle age limit. If the desired car does not meet the criteria for a special used car loan, there is nothing to prevent an ordinary loan from the same bank.
Car buyers should, however, be careful with a loan for the purchase of a used car, not to agree too high rates due to short terms. In contrast to new vehicles, used cars cause the first workshop costs much earlier, for which sufficient money must be available to pay.