Many people who want to finance a new car today opt for an installment loan with a final installment. Such a loan has many advantages. Customers only have to pay a relatively low rate throughout the term, which is made up of the repayment amount and the interest.
In the end, a high final installment is due, which can either be repaid in one amount or financed by a new loan. On the other hand, it could be disadvantageous that the interest for a installment loan with a final installment is very high in contrast to a classic installment loan and that financing the high installment rate can also become a problem in certain circumstances. An installment loan with a final installment is offered by almost all car banks. With the house bank or another Agree bank or savings bank, however, it is rather the exception.
Requirements for lending
A car loan with a final installment could be used for both a new and a used car. It is usually a little easier to get than a normal installment or consumer loan. The main reason for this is that the amount of credit by car has a very specific value.
Nevertheless, nobody will ever get an installment loan with a final installment that does not meet certain minimum credit rating requirements. This includes not only regular income, but also impeccable Credit bureau information. If all the requirements for a loan are met, the installment loan with the final installment is approved very quickly and can be used to finance the new car.
Repayment of the loan
Similar to any other loan, the installment loan with the final installment must be repaid in equal monthly installments over a precisely defined term. When the end of the term is reached, the high final rate is due. Only when it has been completely repaid does the car finally become the property of the customer.
With three-way financing in particular, there would be the option of returning the car to the dealer and thus financing the final installment. Now the customer could choose a new car and finance it again with an installment loan with a final installment.
Of course, the high final installment can also be repaid in one amount. This approach is particularly useful for those people who for some reason have more money available. This could be the case, for example, after an inheritance or after a major tax repayment. All car banks offering such a loan could provide more detailed information on an installment loan with a final installment. However, the car bank that is assigned to the dealership where the new car is to be purchased would be responsible for a specific offer.