easycompr

Car loan comparison: financing your car right

A car can be financed with a free personal loan, an earmarked car loan, or directly through the dealer's bank. What matters more than the monthly instalment is the APR, the term, and what's left at the end.

Three ways to finance a car

The three ways differ less in price than in who owns the car, what has to happen before you can sell it, and how tightly the loan is tied to the purchase.

WayHow it worksWhat to watch for
Free personal loanYou get the money in your account and pay for the car yourself; it's yours from the start.No tie to the vehicle, often free extra repayments. The rate depends on your credit standing.
Earmarked car loanThe bank finances exactly this vehicle. The registration certificate often stays with the bank until it's paid off.Can be cheaper, but you can only sell the car freely after repayment.
Dealer or car bankFinancing runs directly through the car dealer, often with promotional offers.Compare against a free personal loan; watch the balloon payment, mandatory insurance, and the tie to the purchase price.

Act as a cash buyer

With a free personal loan you often show up at the dealer as a cash buyer and have more room to negotiate the price — an edge you usually don't get with dealer financing.

What matters for car financing

The monthly instalment says little about what the car really ends up costing.

The APR is the yardstick

Compare offers with the same amount, term, and down payment. Only then is the annual percentage rate actually comparable.

Choose a sensible term

A car loses value fast in its first years. With a very long term, you can end up owing more than the car is still worth.

A down payment lowers the cost

The less you finance, the less interest accrues. Trading in your old car counts as a down payment too.

A balloon payment means residual risk

With balloon financing the instalment is low, but a large final payment is due at the end. You'll then need follow-up financing, a sale, or a return — and the residual value can turn out lower than expected.

Extra costs add up

Insurance, tax, maintenance and tyres come on top of the instalment. Banks often require full comprehensive insurance for financed cars.

Payment protection insurance is optional

Check whether it's already included in the offer. If it's financed too, it raises the loan amount and therefore the interest cost.

How to go about it

Comparing before signing at the dealer saves the most, because you can still negotiate afterwards.

1. Set a budget

Instalment and total cost including insurance and upkeep — not just the loan instalment.

2. Get offers via soft inquiries

For a free personal loan, a soft inquiry doesn't affect your credit score. That gives you a figure to measure the dealer's offer against.

3. Ask for the dealer offer in writing

With APR, total amount, term, and any balloon payment. Without these figures nothing can be compared.

4. Know your right of withdrawal

Consumer loans can usually be withdrawn from within 14 days. The period only starts once you've received all mandatory information.

easycompr doesn't quote interest rates and doesn't calculate any loan itself. The comparison runs with our partners; what applies to you is set by the provider — it depends on your credit standing, amount, and term.

Compare here

Compare directly with our partners — free and without registration.

Frequently Asked Questions

Is a personal loan or dealer financing cheaper?

There's no blanket answer. Compare the APR at the same term and down payment. Dealer promotional offers can be cheap, but are often tied to conditions like a specific model or a balloon payment.

What does a balloon payment mean?

You pay low instalments during the term and a larger residual sum at the end. Depending on the contract you can then keep the car and pay or finance the rest, sell it, or return it. It matters that the car is worth at least as much as the balloon payment at the end.

Do I have to fully insure a financed car?

With earmarked financing, banks often require comprehensive insurance because the car serves as collateral. What applies to your contract is in the loan terms.

Does asking around hurt my credit score?

A soft inquiry doesn't affect your score. Only a real application or a signed contract gets recorded. Ask the dealer which kind of check they're running.

Loans

Auch vergleichen