Best Car Loans in Germany in 2023
Cars aren’t cheap in Germany. According to the statistics, new cars were sold for an average of 37,790 EUR in 2021. You might don’t have the full amount to pay for it in cash. For this reason, plenty of car loans are available for German and foreign nationals. Furthermore, both used and new cars can be financed with a loan.
You can choose between various car loans and car financing options in Germany. Generally, a car can be financed with a classical installment loan, through a car dealer, or via three-way car financing. Best car loans can be found at platforms like Smava, Auxmoney, and Tarifcheck.
A car loan is a solution for most car buyers in Germany. Therefore, financing a vehicle is as straightforward as it gets. Where to finance your future car, and which providers are the best? This and more you will learn in this article.
Also read this article on how to get a car loan in Germany.
Car financing in Germany
Car financing is very common in Germany. Whether you buy a new or used car from a dealership or private seller – you can finance it with a loan. According to the DAT Report 2022, 66% of all new vehicles purchased in Germany are financed by an installment loan or a loan from a car dealer.
For used cars, this number is 50%. Moreover, most loans taken out in Germany are spent on buying a car. In fact, 56% of all installment loans are used for car financing.
On average, a typical new car financing is 19,900 EUR for 49 months and 13,300 EUR over 50 months for used vehicles.
Here are some more statistics on German car buyers:
- About 34% of all car buyers in Germany purchase their vehicle in the car.
- 56% prefer car financing.
- About 10% choose to lease a car instead of buying it.
When selecting a car loan, make sure to specify car financing as the intended use. Such loans are often cheaper than general ones.
Steps to take when financing a car in Germany:
1. Plan
First, determine what type of car you want, new or used, how much you drive per year, and how much money you have to buy it. You should also decide which car financing way is the best for you, e.g., car dealership, installment loan, or balloon financing.
2. Compare
You can find and compare car prices, models, and financing terms beforehand with the help of the internet. For this, you can use various online loan calculators such as Tarifcheck or Smava.
On the Smava platform, you can apply for a loan at some of the most popular banks in Germany, including Commerzbank, Deutsche Bank, Barclays, Bank of Scotland, and Santander.
Compare the best loans in Germany by using the tool below:
Click on the button to load the content from tools.financeads.net.
3. Negotiate
Decide on the car model and equipment you want in a new car. After you can negotiate a discount, they are often possible.
Lastly, to get any type of car loan/financing, foreign nationals must have their primary residence and a source of income in Germany.
Car financing options
1. Installment loan (Ratenkredit)
An installment loan is a preferred way of car financing for most German buyers. It’s a loan from a traditional bank, car manufacturer bank, or direct bank, used to fully or partially finance the car.
The borrower repays the borrowed amount in monthly installments. The amount of the monthly installments depends on the term: the shorter the term, the higher the installments.
You can also choose to pay a downpayment or not. Initial downpayment will lower your monthly payments (installments).
The car loan term can range from 24 to 60 months, depending on the car price. The best interest rates are offered when a 20% down payment is made. However, the earlier payout of the bank loan might cost you money.
You own a car at the end of the term loan. Generally, car loans are cheaper than personal loans because the vehicle serves as collateral for the bank. So make sure you specify car financing as the intended use when applying for a loan.
A car loan is an installment loan for a specific purpose, i.e., a loan that is paid off monthly in installments. Nonetheless, an installment loan can be taken without any particular reason.
For competitive rates, check out car loans from banks like 1822direkt or Postbank.
Moreover, banks offer better car financing conditions than a standard installment loan. The reason for this is the higher security: the borrower must provide the registration certificate Part II, which the bank uses as security.
You must keep in mind that a financed car can not be sold before the end of the loan term. You will need to fully pay off the loan before the vehicle belongs to you. Usually, it’s around 5 years.
The main disadvantage of an installment loan is that the monthly rate can be pretty high if you opt for a short-term or no downpayment. In the long term, the cost of the loan increases because interest accumulates over a longer period.
Example of the car loan in Germany
You might see the following numbers when taking a standard car loan (installment loan) in the bank:
| Bank loan | |
|---|---|
| Car price | 24,700 EUR |
| Down payment | 4,940 EUR |
| Monthly installment | 599,63 EUR |
| Loan term | 36 months |
| Interest rate | 5,99% |
| Total car cost | 26,526 EUR |
2. Three-way car financing (Ballonfinanzierung)
With three-way car credit, you can stay flexible and pay lower monthly rates. At the end of the loan term, you have 3 options:
- purchase the car
- give the car back to the dealer provided a certain mileage wasn’t exceeded
- finance the car
3-way financing (also called balloon financing) is another way to finance a car in Germany. The main advantage of this type of financing is low monthly installments. However, buyers must keep the following aspects in mind:
- a down payment is required in most cases
- a loan term is relatively short, usually between 2 and 4 years
- low monthly installments
- the final installment is high
Even if you don’t have enough money to pay a high final installment, you can pay for the car with the help of follow-up financing.
However, a balloon loan is only good if you have enough funds to cover the final payment. If you are refinancing it with another loan, you might lose quite a bit of money. Such deals are beneficial only for banks.
Consequently, this type of car financing is less favorable for the buyer than a classical installment loan but offers additional flexibility for a buyer.
Which bank offers balloon financing? Most banks that offer car loans also provide balloon financing.
Car loan providers in Germany
Where can you get a car loan in Germany? Loans can be taken in various places:
| Loan provider | Description |
|---|---|
| Home bank | Most people in Germany apply for a car loan at the bank they already have a bank account at. Branch banks are trustworthy lenders. Some banks require the car as collateral for the financing and deposit the registration certificate Part II until the loan is paid off. |
| Bank of the car manufacturer or car dealer | Many car manufacturers have their own banks that you can use for financing. Besides, car dealers will offer you to finance a car too. Dealers and car banks often advertise favorable 0% financing. But it’s not always true. Dealers and car banks often keep ownership of the vehicle to themselves until the loan is paid off. Hence, it’s worth considering the offers of independent credit institutions. |
| Online and direct banks | Online and direct banks often offer great terms for a car loan which can be even more favorable terms than many branch banks. Our recommended online loan providers are Smava and Auxmoney. The main advantage of these loan providers is that they often don’t require vehicle documents to be deposited as collateral. |
Your own (current) bank is usually the best option for a car loan since they know your creditworthiness and can quickly approve your request.
Standard banks provide competitive rates of interest to their customers. So you can try approaching your banking for a loan.
The main drawback is that they might not always have the best interest rates.
In addition to the main banks, you should check the offers of direct banks. Car financing online with a direct bank is often cheaper than financing the car through a branch bank.
Direct banks employ fewer staff, and don’t have physical branches in Germany; hence their costs are lower.
In any case, you should have a decent SCHUFA (creditworthiness) in Germany. Check your SCHUFA score before applying for a loan.
Check out best loans in Germany in this article.
Loans from the car dealer
When buying a new car in Germany, you might also consider financing it via the car dealer. In fact, some people prefer to finance their vehicle directly at the car dealership.
Financing through a car dealer offers different advantages, such as an easy and speedy process. You can select the car and request financing right there at one spot. Moreover, the interest rate on such car loans is often pretty low. In some cases, even zero-percent funding is possible.
Although a car loan from the dealer might seem cheaper than a bank loan, you should consider possible pitfalls. Firstly, you need to check all conditions before signing anything.
For example, unscheduled repayments and early redemption of the loan are impossible or expensive. Moreover, the car loan from the dealer is often restricted to an individual car.
Interest rates in Germany
Here is an example of typical interest rates for financing a new car:
| Credit | Price of the car (with a loan) – 18,200Â EUR |
|---|---|
| Car | New car |
| Loan term | 48 months |
| Low-interest rate | 2,24 % |
| Average interest rate | 3,99 % |
| High-interest rate | 8,88 % |
Best car loans in Germany
Many banks in Germany provide car loans for private clients. Auxmoney provides the easiest loan solution with minimal requirements.
Some of the best car loans in terms of conditions, ease of application, and approval rates can be found on loan comparison platforms Smava and Tarifcheck. Here is an overview of the best loan options:
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Furthermore, below you can see the car loan conditions in the largest German banks when borrowing 20,000 EUR for 60 months (classic car loan).
| Bank | Monthly instalment | Interest rate |
|---|---|---|
| SWK | 376€ | 3,99% |
| DKB | 357€ | 5,6% |
| TargoBank | 348€ | 3,48% |
| 1822direkt | 350€ | 3,96% |
| Norisbank | 345€ | 2,77% |
By using Smava, you will have access to all of those banks.
1. Smava
Smava is one of the favorable solutions for a car loan in Germany. It’s the biggest online financing marketplace, where you can:
- find
- select
- apply
- and receive a loan in Germany
They help you to pick the best loan and terms among 70 available options from over 20 German banks. For any help, you can reach out to one of 200 loan advisors. A personal loan from Smava can be used for any purpose, including purchasing a car.
| Term duration | Loan (EUR) | Interest rate | Success rate | Highlights |
|---|---|---|---|---|
| 12 – 120 months | 500 – 120,000 | 0,40% – 10,90% | High | Fast processing time |
| Pros | Cons |
|---|---|
| Fast processing time | High interest rates |
| Loans for people with weak creditworthiness (SCHUFA) | |
| Loans for the self-employed | |
| Effective APR from 0,68% |
Steps to get a car loan with Smava
- Submit all required information, such as term and loan amount.
- Enter your personal data. After, you will receive loan offers from different banks in Germany.
- Select the bank and apply for a desirable loan direct from the platform.
- If your documents are complete and all requirements are met, you will receive your money within a very short time.
Read our full review on Smava.
2. Auxmoney
Auxmoney is a peer-to-peer lending online platform that eliminates the high cost and complexity of financing via traditional banks.
The loan application process happens online and is straightforward & fast. Auxmoney made lending as easy and transparent as possible.
Over the company’s history, Auxmoney has given over 325,000 loans of more than 2 milliard EUR. Auxmoney is rated as 4,8 out of 5 in service and offerings.
| Term duration | Loan (EUR) | Interest rate | Success rate | Highlights |
|---|---|---|---|---|
| 12 – 84 months | 1,000 – 50,000 | average 4,42% | High | Fast payout |
| Pros | Cons |
|---|---|
| Fast payout | Interest rates can be high |
| Loan with a low credit score | |
| Money from private lenders |
The main requirements:
- You are resident in Germany
- You have a current account with a German bank
- You have a regular income
After fulfilling these requirements, you can receive a loan from Auxmoney within 24 hours or the next few days.
From our research and experience, Auxmoney is by far the best and easiest place you can get a loan as a foreigner; the refusal rate is very low, as well as the requirements. It’s a private organization powered by investors’ funds, which is different from the traditional bank.
3. SWK Bank
SWK is the largest direct bank in Germany, with over 60 years of experience with over 20,000 positive reviews. You can easily apply for a car loan online; in fact, the entire process of getting a loan is digital. Hence, you can expect a straightforward application and quick processing.
Loan terms at SWK bank:
| Term duration | Loan (EUR) | Interest rate | Success rate | Highlights |
|---|---|---|---|---|
| 24 – 120 months | up to 100,000 | From 1,54%; Average – 3,29% | High | Simple and fast |
| Loan amount | 2,500 – 100,000 EUR |
| Annual interest rate | 1.54 – 3.92% |
| Effective interest rate | 1.55 – 3.99% |
| Age requirement | 18 |
| Employment requirement | 6 months |
| Minimum required annual income | 0 EUR |
| Administration fee | 0 EUR |
4. Tarifcheck
Tarifcheck.de is an online loan calculator where you can compare a wide range of loans and credits in Germany. Tarifcheck.de has been around since 2001 and is one of the largest comparison platforms in the country.
The process is super easy; you just need to specify the desirable loan duration and amount. The conditions are very favorable, including:
| Term duration | Loan (EUR) | Interest rate | Success rate | Highlights |
|---|---|---|---|---|
| 12 – 120 months | 1,000 – 100,000 | 0,68% to 5,99% | High | Finds the best rates on the market |
5. 1822direkt
Bank 1822direkt is a part of the well-known Sparkasse bank in Germany. At 1822direkt, you can get a car loan between 2,500 EUR and 50,000 EUR. The duration of the loan varies between 12 months and 120 months.
Here is an example of a car loan from 1822direkt:
| Loan amount | 27,000 EUR |
| Term | 84 months |
| Annual interest rate | 2,99% |
| Borrowing rate | 2,95% |
| Monthly installment | 356,40 EUR |
| Total | 29,932 EUR |
| Term duration | Loan (EUR) | Interest rate | Success rate | Highlights |
|---|---|---|---|---|
| 12 – 120 months | 2,500 – 50,000 | 2,49% to 7,31% | Average | Free bank account |
6. Verivox
Verivox is the largest German platform to compare loans, electricity & gas plans, car insurance, and internet deals.
Their comparison tool includes a wide range of Germany banks you can choose from. Loans up to 100,000 EUR with a duration of up to 10 years are available. All inquiries via Verivox are SCHUFA-neutral.
When picking your loan, pay attention to the annual percentage rate (effektiver Jahreszins) and the nominal interest rate (Sollzins).
| Term duration | Loan (EUR) | Interest rate | Success rate | Highlights |
|---|---|---|---|---|
| 12 – 120 months | up to 100,000 | From 0,0%; Average – 3,52% | High | Find the best rates through a detailed comparison |
Features of Verivox:
- The interest rate starts from 0.0%
- 100% digital
- Same-day processing is possible
- Special repayment
- Payment pauses possible
- SCHUFA-neutral
Requirements for a car loan in Germany
To successfully receive a car loan in Germany, you must meet the essential requirements such as:
- Be at least 18 years old.
- Prove your permanent residence in Germany.
- Have a regular income and a good credit rating.
Generally, lenders are less strict with requirements for cal loans because the vehicle serves as collateral.
SCHUFA – German credit score
Most German banks will require a SCHUFA report when you apply for a car loan. You can check your current SCHUFA score on this website.
If you are looking to buy a car in Germany, read our article on the cheapest cars in Germany and some other car-related posts:
- Can a foreigner buy a car in Germany?
- Used car prices in Germany
- Getting a car loan in Germany
- How to buy a car in Germany for export
- Best websites to buy a used car in Germany
- Car insurance in Germany
- Cheapest car insurance in Germany
- Buying vs leasing a car in Germany
- How much does it cost to own a car in Germany?
