A car loan with the remaining amount can be taken out at many Agree or savings banks. Most car banks, which are affiliated with the car dealerships, offer such a loan to their customers. Due to the fact that the remaining amount of car loan has some peculiarities, the decision for or against this form of car financing should be carefully considered.
Differences to classic car loans
A classic car loan is characterized primarily by the fact that the monthly repayment rates, which are made up of the repayment amount and the interest, remain unchanged throughout the entire term. In the end, not only is the loan repaid, but the car is paid in full, which then finally becomes the property of the buyer. The situation is completely different if the car loan has a certain remaining amount. Only very low repayment rates have to be paid here, some of which are significantly below the amount of money that is customary for a classic car loan. On the other hand, however, a high residual amount has to be financed, which can often be in the four-digit USD range.
For many people who will soon have a larger amount of money at their disposal, the car loan with the remaining amount could be ideal. However, everyone else would have to think seriously about how they want to fund this remaining amount. However, there would also be the possibility of taking out a new car loan to repay the high balance. This could also be a classic car loan.
Selection of the loan provider
Every borrower should take enough time to choose a suitable provider for a car loan with the remaining amount and also pay attention to the effective annual interest rate. This APR is often significantly higher for a car loan with a residual value than for a conventional car loan. In this way, the bank wants to hedge against the risk of premature default on the part of the customer. This risk is always higher with long terms and / or low monthly installments than with all loans that are characterized by higher monthly rates and shorter terms.
If you take out a bank loan, you can pay the entire purchase price for the new or used car in cash. In this case, the dealer often grants substantial discounts in the double-digit percentage range. Unfortunately, this possibility does not exist when borrowing from a car dealership. However, there may be other advantages for the customer here. The car bank connected to the car dealership in question can provide more information.