More than 95% of all new car purchases in Germany are financed.
Used cars are bought in cash or also financed with a car loan depending on their conditions. More and more banks show themselves open to the financing of used cars.
On this page you will learn:
- the most important requirements for a successful loan application and
- you will additionally get useful tips on how to increase the probability of a loan approval extremely!
It will be worthwhile for you to read this page with great attention and possibly recommend it to (car-) friends.
1. Who grants car loans in Germany?
There are several possibilities, where and how you can get a car loan that is suitable for the financing of a new or used car.
These are the most frequently used possibilities:
- Car loan of the own bank (main bank)
- Car loan of the bank of the car manufacturer (some car manufacturers also finance used cards, e.g. the Volkswagenbank)
- Instalment contract through the car dealer
- Car loan through an Internet comparison
- Private financing (loan from private people, can also be organized through the Internet = Auxmoney).
Often, people looking for a car loan contact their main banks or another loan institution first. This could be a mistake, unless you have a friend working in that bank. Because if no loan is granted, then you could get “burned” in the worst case and you have only asked one bank without a true comparison.
The instalment contract at the dealer, which is nothing else but a car loan, is not used very often.
Meanwhile, car dealers offer different financing forms: mediation of a bank loan of a partner bank or leasing (also through a partner).
We have made the best experiences with the comparison of car financing by observing serious internet platforms.
The advantage is here, that the loan application is calculated with the models of up to 30 banks by entering the data only once.
This does not only extremely increase the possibility of a car financing approval, but also lowers the interest – sometimes substantially – due to the simultaneous competition of several banks to get “your” loan.
Comparison on the internet: increases the chances, lowers the interest!
Through a comparison on the internet you increase your financing chances and might at the same time obtain a lower monthly instalment.
If this is an option for you, then you should take a look at the financing specialist Smava. This, in our opinion, is currently the best option!
Direct link to Smava ► www.smava.de/autokredit.
If your creditworthiness is lower than average, then a financing from private to private person should be an option. This works best, if the parties know and trust each other, like e.g. in a family.
If this is not possible, there is also the option of borrowing money for the car financing from different private persons through an automated system on the Internet.
The best known and most successful loan platform for this is Auxmoney.
Direct link to Auxmoney ► http://info.auxmoney.com/auto-dis.html.
2. What requirements do I have to fulfill for a car loan?
Before you decide on a car loan and with this for the loan application, you should know that you have to fulfill some basic requirements with almost every lender.
Depending on the provider, there are some or all of the following requirements that you as an applicant have to meet:
- Legal age (in Germany, this is 18 years or older)
- Place of residence in Germany (e.g. provable through the registration card)
- Sufficient income from a job, self-employment or pension
- No negative Schufa-entry
- Up to now, no bad experiences on the part of the lender
- A current account with DE-IBAN (for debiting of the monthly instalment)
Every potential lender will a) check, whether he/she can give you money for a car financing and b) up to what maximum amount.
Such a calculation takes place mainly through your statements (income, living situation like apartment and/or children, already existing loans) and supplementing information of creditworthiness agencies.
The biggest creditworthiness agency in Germany is the Schufa.
Regarding the Schufa query, it is important that you do not have a negative entry, such as a default summons or even more negative entries, an affidavit.
Moreover, persons interested in a loan have an easier time to get a car financing if they have a permanent job. You know that banks love regular and planable payments (that are made from your regular salary payments).
However, there are also providers that offer good conditions for self-employed persons and freelancers. Due to the fact that you can hardly know them and these changes depending on the current bank politics, it makes sense to perform a comparison on the Internet.
With the entry of your personal data, the loan calculator recognizes if you are self-employed or a freelancer and will then continue with only those banks that offer good conditions for this professional group.
In the worst case, you might apply for a loan at a provider being self-employed that does not finance self-employed persons at all, which would lead to a rejection of the loan application and could worsen your creditworthiness at the agencies!
Here again for you the link for the online loan comparison, which you can use without hesitation: https://www.deutscheskonto.org/en/loan/car/comparison/
Tip: Check the Schufa data and calculate the freely available income
Out of experience we know that you as an applicant have outstanding possibilities to increase the probability of a loan approval.
It is not uncommon that the bank or the car dealer e.g. rejects the loan application because of a negative entry in the Schufa. The applicant often is not informed that the loan approval failed because of the Schufa query.
Justified negative entries cannot be changed, but sometimes it happens that there are wrong negative entries in the Schufa or that these should have been eliminated a long time ago.
Therefore, it could be a good idea to get a Schufa self-query before making the loan application. You can do this according to § 34 Bundesdatenschutzgesetz (BDSG; federal data protection act) free of charge once per year. How this works, you can find out on this page.
In case there is wrong or outdated Schufa data, then you can arrange an for elimination of the wrong/outdated entry and thusly avoid that your loan application is rejected due to wrong negative entries in the Schufa. The loan application should only be made after the correction of the Schufa, possibly also after the score-update, which is implemented at the beginning of each new calendar quarter.
The probability of a loan approval can be increased best, if you can name a second borrower.
This is the best option for the bank, because they now have two persons responsible for the proper repayment of the loan.
An advantage for you: A better creditworthiness often leads to a better interest rate. With a second borrower, not only the chance for a loan approval increases extremely, but also the loan will become even cheaper for you!
Whether or not you can afford a car loan, you can calculate using an budget calculation. The bank does this, too, by partially using your statements and partially using statistical lump sums.
You can easily do that as well, with an income and expenditure calculation. On the left side, you write all income and on the right side all expenditures.
The classic expenditures are:
- Rent or instalment of real estate financing
- Ancillary costs of residence
- Costs of living (food, drinks, cloths)
- Costs for the car (gas, insurance, etc.)
- General insurance contributions
- Leisure spendings
- Possible instalments of other loans
- Possible savings, if you have been saving balance up to now
Then you deduct the sum of expenditures from the total income.
Is there a positive amount left? If yes, how much?
This is your leeway for an instalment!
However, do not forget that things happen in life. Therefore: Do not use the whole financial leeway for the instalment.
If this amount is very low, think about how to increase it. Is there a possibility to increase the income? Can you save an expenditure? Both?
If you have more expenditures than income, then it is not a good idea to apply for a loan. This does not lead you in the right direction. We have to be honest here. 🙂
Do you know this trick already?
If your planned instalment is higher than your freely available income, then there is another “trick” to increase the success chances for the loan approval of the bank.
Just choose a longer term!
This lowers the monthly instalment, so you can afford the car financing in the best case!
Moreover, the bank earns more from you through the longer term. This should be very advantageous for the loan approval. 😉
Example: increase from 3 to 5 years
If you chose e.g. a repayment term of three years, but then realize that the monthly instalment is higher than your freely available income, then simply extend the term to four or five years.
It is advantageous if you use the suitable term length right away, when making your loan application. With this, you lower the risk that the lender has to reject the application, because of your freely available income being too low compared to the instalment.
You will possibly be warned by the financial advisor of Smava to apply for a loan with an unfavourable term.
However, to get in contact with the financial advisor, you have to enter the required loan statements and your personal data first. You can do this here ► www.smava.de/autokredit.
Tips for people who have been in Germany for a longer time or have started to build assets:
If all previously mentioned tips should not work or do not help in your particular case, then there is a further possibility of how to increase your chance of a loan approval for the desired car loan.
You can suggest to the lender to provide him/her with additional securities. Most often, there will be a chattel mortgage of the financed vehicle anyway. If this is not enough, then perhaps you have further securities that you can offer to the lender, for example:
- pledge of securities
- pledge of savings balance
- transfer of claims (life insurance)
We want to mention here again the biggest lever for a loan approval: a second borrower. In this case, there would be officially two instead of only one borrower, which would lower the default risk for the lender and leads to a much more likely loan approval.
Summary for “browsers”
There are several possibilities to get a car financing in Germany. Important is that one fulfills the basic requirements (see above). Otherwise, one can waive on the application efforts.
The success extremely depends on the way that one chooses to get a loan for the car!
The highest success rate is obtained by using serious internet comparisons, such as this one: https://www.deutscheskonto.org/en/loan/car/comparison/
If you take the tips of our article into account, then you additionally increase the probability of a positive loan approval.
A small petition to you 🙂
The research for and creation of such content is a lot of work and includes a huge amount of time. However, we are pleased to do it, especially if it helps you!
We can see whether it has helped you, if you – perhaps thanks to our ideas and tips – obtained your car financing.
If that is the case, please send us a photo of you and your new car by e-mail or post your feedback through the comments feature directly below this article (we also answer your questions there).
Sent photos will be published, if you agree to it.
Moreover, we would be glad, if you could recommend this article or this specialty portal.
Many thanks for your support, and we wish you lots of success with your car financing!
PS: If I had to finance a car today, then I would – I guess just like you after studying this article – use this loan calculator, because at the current interest rates, it is even clever to finance a car and keep savings, if they are well invested!