Should you choose a car loan from a bank or dealer?

The big banks usually have different prices depending on your customer relationship. This means that the better a customer you are for your bank, the better the car loan you can get.

Therefore, you may also want to consider an overall assessment of your finances when you want to take out your car loan at the bank. As a rule, collateral must be provided when borrowing money from your bank.

Car loan from bank or dealer

Car loan from bank or dealer

At dealerships, you typically get a lower interest rate, but not necessarily cheaper car loans. That’s because your new car loan usually includes a significantly higher setup fee. Many motorists take out their car loan from the dealer because they then get it all together – the car and the loan.

In the banks, the set-up fee is usually lower, but the interest rate is higher. In recent years, car loan rates have fallen and banks are now competing significantly better with dealers. Therefore, you should inquire about your new car loan at the bank before going to the dealer. 

If you do not want to go to the bank, you may want to look at car loans from other providers, which act as consumer loans instead. Here you do not have to provide collateral for the loan and you can easily compare the costs. 

Payment Explanation: A 20% down payment means you have to pay 20% of the car loan yourself. If you want to borrow USD 100,000, you must pay the USD 20,000 yourself. This gives your lender a guarantee that you will be able to repay the loan because you have money in the account at the time of the loan.

Bargain over the price

Bargain over the price

When you take up the car loan you can to some extent bargain for the price. However, always remember to include the interest rate, as this will be crucial to your car loan cost in the long run. This can only happen if the offer is not online and pre-set.


You should not change the maturity, but rather increase the installments. This may pay off in the long run. Namely, maturity is the time that you choose to pay off your loan. You should therefore also set your maturity so that, as far as possible, it is the same as the period you have the car in. That way you will not end up paying for a car that you no longer have.

Save up

While paying off the loan you are currently using, you should save up for your next down payment on your next car loan. Most motorists do not have their cars for longer than this does not ruin their finances. On the contrary, they are one step ahead.

Loans in the house or apartment

Loans in the house or apartment

If you do not have the opportunity to save all the money for a new car yourself, and if a car loan is still an expensive solution for you, then you may want to consider borrowing money in your house or apartment. Of course, this requires that you are not mortgaged to the top of the chimney and that you do not live in a rental apartment.

A loan in your house or apartment will usually be cheaper than a car loan at any time. On the other hand, the term of a home or apartment loan is usually at least 10 years, and you are therefore bound to your loan for a minimum of 10 years.

Finding the Right Interest Rate

When you apply for a car loan, you can choose between a variable or a fixed interest rate. The variable interest rate adjusts to the European interest rate, whereas the fixed interest rate is usually slightly higher, but then the same is always the same. If your household budget is tight, it may be worthwhile to pay the fixed interest rate because you always know how much to pay.