Jump to annual interest: variable or fixed interest rate? Free automobile banks are based on the interest rates of the manufacturer-bound autobanks. This is followed by a contractually agreed term, in which installments are paid monthly with a fixed interest rate. The calculated real interest rate is expected to be above the reported value. A low interest rate in connection with an agreed maturity is within reach.
Financing via home or vehicle bank
You can choose between debt financing through the manufacturer’s bank, a free car bank or a cash payment with a loan from your bank. Special financing tailored to the needs of drivers is offered by the automobile banks. Another plus point is the deposit with the dealer. Frequently, automotive manufacturers have campaigns in which they offer particularly favorable interest rates for individual vehicles.
The automobile banks are quite willing to grant a discount on the financing.
Free vehicle banks are based on the interest rates of the vehicle banks bound by the manufacturer. Which vehicle bank you choose depends on which of the two banks has their place in the dealership. Ordinary banks can often only provide installment loans for refinancing. Given the low level of interest offered by some traders, the mortgage bank’s loan appears to be significantly higher for the time being.
For a loan with a repayment period of 48 years and a deduction of 0 percentage points, the motorway charges an effective interest rate of 1.9 percentage points per year. The loan costs (interest + processing fees) amount to 389.30 EUR. On the other hand, if you borrow 8 per cent from a house bank, you must at least negotiate a discount of 10.86 percentage points (1,086 euros) so that the bank loan is the same as the car loan for the same time.
The calculation is based on a loan amount of EUR 8,914 because you negotiate a discount and thus have a lower loan amount. But the total amount of all tranches also amounts to EUR 10,389.60, as the increased interest rate of 8 percentage points “eats up” the discount again. Thus, if the discount of the dealer in the house bank financing and the effective interest rate of the automobile bank at the same time so balanced that for both types of financing an identical interest rate is obtained, the more favorable variant of the interest financing is not possible.
You should keep in mind that you can still negotiate a discount on car rental.
Financing via the in-house bank is therefore only worthwhile if the vehicle bank also charges a high interest rate for the selected vehicle model. If the interest rate is below one percentage point, refinancing via the automobile bank is cheaper. The saved funds can also be invested and interest and price gains can be achieved.
The higher the interest rate that the vehicle bank has to pay in order to receive financing from the vehicle bank, the lower it is. Whether a car bank loan or a “normal” one, it always depends on the interest payments to be paid and the discount granted by the car dealer.