A car loan is the best solution when you are about to buy a car but don’t have enough savings in your bank account. Luckily, it’s relatively simple to finance a vehicle in Germany. In fact, you can take out a car loan or finance it via the car dealership.
Foreign nationals can receive a car loan to finance a car in Germany. The main requirements include residence in Germany and a stable source of income, preferably through employment. Car loans are available in traditional banks, peer-to-peer lending companies, and car dealerships.
Whether you buy a new or used car from a dealership or private seller – you can finance it with a loan. In this article, we explain how foreign nationals can receive a car loan as well as your best car financing options in Germany. Besides, you can see the best car loans in another article.
Finance a car as a foreigner in Germany
A typical new mid-range car will cost you from 20,000 EUR to 40,000 EUR, depending on the model and the options you choose.
Most people don’t have such large sums sitting in their banking accounts. You might not know it, but car loans are the most common way Germans finance their vehicles. Only a few people buy cars in cash. In fact, 59% of all loans in Germany are used for car financing.
Wondering if foreigners can buy a car in Germany?
Hence, there are many ways one can finance a car in Germany. Even as a foreign citizen, you have a wide variety of options.
Financing a vehicle in Germany is also very beneficial since interest rates are very low. For a car loan, you will usually need a down payment of a couple of thousand euros.
Car financing in Germany
If you don’t have enough cash to buy a car, you can finance a vehicle in Germany. There are a wide variety of loan providers who will secure reasonable financing conditions for your purchase.
You can select between traditional banks, e.g., Sparkasse, direct banks, or more flexible financing options such as Auxmoney and Smava.
Generally, there are two main ways to get a car loan in Germany:
- Car loan from the bank or other financial institution
- Car financing through car dealer
Car financing or leasing?
1. Installment loan (Ratenkredit)
Classical private loan with fixed monthly installments is Germany’s most common type of car loan. Such loans are given based on your creditworthiness.
Due to the higher security, most German banks offer very good and better conditions for car loans than other financing reasons.
In that case, the borrower must provide the registration certificate Part II when applying for a loan. Hence, it gives banks more security. Furthermore, lenders make a basic down payment of a few thousand EUR.
Check out competitive rates from 1822direkt, and SWK bank.
Keep in mind that car buyers can’t sell the vehicle during the loan period is still running. Usually, it’s around 5 years.
You can select between dozens of banks that provide such financing options or opt for one in your house bank.
To receive a loan, foreign nationals need to have their primary residence in Germany and a stable income.
Nonetheless, banks are more careful with applicants’ SCHUFA (credit) scores. If it’s slightly off, they might refuse your application.
Your own (current) bank is usually the best option for a car loan since they know your creditworthiness and can quickly approve your request. 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 the direct bank is often cheaper than financing the car through a branch bank.
Direct banks employ fewer staff, don’t have physical branches in Germany; hence their costs are lower.
Standard banks provide competitive rates of interest to their customers. So you can try approaching your banking for a loan.
Depending on the car price, a car loan term can range from 24 to 60 months. 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.
Check your SCHUFA score before applying for a loan.
Check out best car loans in Germany in this article.
2. Loan comparison platforms
One of the best ways to get a car loan in Germany is to select it via one of the online comparison platforms such as Smava, Tarifcheck, and Verivox.
1. Smava is Berlin-based and Germany’s first FinTech company, founded in 2007. You can find and apply for various loans in Germany on this platform, including online and classic financial institutions.
It’s rated as 5 out of 5 in finding financing in Germany. With Smava, you can apply for loans in banks like Commerzbank, Postbank, Unicredit, Sparkasse, Deutsche Bank. Loans between 1,000 EUR and 120,000 EUR are available.
2. Tarifcheck is the second place where you can compare loans and mortgages in Germany. The process is simple, just select the loan amount as well as the term duration, and you will see all options.
3. Verivox is one of the largest German platforms to compare all sorts of stuff, including loans, car insurances, internet deals, and electricity & gas plans.
There you can choose the type of loan and the conditions. Loans up to 100,000 EUR with a duration of up to 10 years are available. All inquiries via Verivox are SCHUFA-neutral.
3. Peer-to-Peer loans
Another option to finance a car in Germany would be taking out a peer-to-peer loan. They are more flexible in their terms and requirements than traditional bank loans.
Peer-to-peer loan providers are still new on the market but have become widely popular due to the ease of the application and high acceptance rate.
In such companies, loans are financed by private investors, so they are more tolerant to the applicants. Hence, the requirements are lower, and getting a loan is more accessible.
Advantages of car loans from peer-to-peer providers:
- Easy application process
- Fast approval and payout
- Low interest rates
- Tolerates lower SCHUFA score
Auxmoney is the largest provider of private loans in Germany.
They are known for their high success rate when taking a car loan. You can borrow between 1,000 EUR and 50,000 EUR for the duration of 12 and 84 months.
4. Car loan via car dealership
Some people prefer to finance their car directly at the car dealership. Every car dealer has a partnership with some bank, where you will be applying for financing.
Hence, banks like Volkswagen bank, BMW bank, Audi bank, and Mercedes bank collaborate with car dealers and specialize in providing car loans for car buyers.
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.
Therefore, no additional bank appointments and no further paperwork are needed. Furthermore, you will get the answer regarding the financing right there at the dealership when buying the car, yet rates aren’t always the best.
The car dealer will check your credit score online and will initiate a credit request with the bank. Once approved, he will inform you.
It’s recommended to select a “Schlussrate” option when financing a car through the car dealership. This will secure the lowest interest rate and the lowest monthly installments for you.
Example of the car loan in Germany
You might see the following numbers when taking a standard car loan in the bank:
|Car price||24,700 EUR|
|Down payment||4,940 EUR|
|Monthly installment||599,63 EUR|
|Loan term||36 months|
|Total car cost||26,526 EUR|
Best places to get a car loan in Germany
There are many banks in Germany that provide car loans for private clients. Auxmoney provides the easiest loan solution with minimal requirements. Apart from this, you can go with conventional German banks.
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.
Furthermore, below you can see the car loan conditions in the biggest German banks when taking out 20,000 EUR for 60 months (classic car loan).
|Bank||Monthly instalment||Interest rate|
By using Smava, you will have access to all of those banks.
Smava is one of the favorable solutions for a car loan in Germany. It’s the biggest online platform, where you can:
- and receive a loan in Germany
Smava will give you an overview of 70 loans from more than 20 leading credit banks, online lenders, and peer-to-peer lenders. For any help, you can reach out to one of the 200 loan advisors.
Benefits of a car loan with Smava:
- decent and legitimate loan offers with favorable conditions
- neutral SCHUFA request: your loan application does not affect your credit score
- loans from 500 EUR to 120,000 EUR
- loans for the self-employed
- it’s 100% free!
- no additional or hidden costs
- effective APR from 0,68%
- fast processing time (max. 2 working days)
- fast loan payment
Steps to get a car loan with Smava
- Submit all information, 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.
Auxmoney is a peer-to-peer lending online platform that eliminates the high cost and complexity of financing via traditional banks.
The company has a very straightforward, fast, and easy process for lending money, making the process 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.
Benefits and conditions of Auxmoney:
|You can get a loan with a low credit score|
|Favorable interest rates – from 5.40% / year for a loan of 50,000 EUR|
|Fast money from private and institutional investors|
|Loans from 1,000 EUR to 50,000 EUR|
|Loan term between 12 and 84 months|
|Completely online process with no paperwork|
|You can apply for a loan even if a traditional bank refuses your loan request|
Application and the whole process at Auxmoney are made online.
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 will 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.
Read our full review on Auxmoney.
SWK is the largest direct bank in Germany that has been around since 1959. Over 20,000 customers had a positive experience with SWK bank.
To get a car loan, you can easily apply online; in fact, the entire process of getting financing 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%|
|Employment requirement||6 months|
|Minimum required annual income||0 EUR|
|Administration fee||0 EUR|
Bank 1822direkt is a part of the well-known Sparkasse bank in Germany. At 1822direkt, you can get a 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 basic loan with 1822direkt:
|Loan amount||15,000 EUR|
|Annual interest rate||2,99%|
|You pay 83 monthly installments of 197,70 EUR and 1 final installment of 195,65 EUR|
5. Santander CarCredit
Santander is a large international bank. In Germany, it belongs to the top 5 banks in the country. They offer several loans and credit cards for private clients.
Car loan with Santander CarCredit:
- Favorable interest rates
- Quick credit decision
- Non-binding inquiry and calculation
- Loan amount – from 1,000 EUR to 60,000 EUR
- Loan duration – from 12 to 96 months
- Annual interest rate – from 1,99% to 7,98%
- 90 days installment freedom
- Easy application and convenient online identification with VideoID
With Santander’s car loan, you can increase your credit amount during the term at any time. Moreover, you can also put your credit on pause.
Compare various car loan options
Before you opt for any of the options mentioned above, it’s crucial to compare all offers on the market. Germany is big on cars and so on car financing!
Have a look at comparison websites that can give you an idea of all banks and private loan offers and rates. That way, you can grab the best deal. Some of those sites are:
To receive an individual loan offer, you must first select a loan type for a car purchase or “Autokauf“ / “Autofinanzierung” and submit a request.
After that, you will receive the best interest rates for car loans. When applying for the loan offer, you will receive an approval within one day, in the best case.
Some of the best platforms are Smava, Tarifcheck and Verivox. With Smava, you can borrow from 1,000 EUR and up to 100,000 EUR for up to 10 years. The loan can be taken online and with a same-day payout.
Requirements for a car loan in Germany
Loans, however, aren’t granted to everyone who applies. You also need to fulfill particular requirements.
For example, you can only apply for car financing if you live in Germany and have income. Here are the standard bank requirements:
- At least 18 years of age
- Main residence and residence permit in Germany
- German bank account
- Sufficient credit score (SCHUFA)
- Regular income (at least 600 EUR per month)
- Employment for at least 1 month
- For self-employed persons and freelancers should submit at least 1 income tax assessment, which isn’t older than 3 years
- Retirees are also eligible
Furthermore, the longer you have been living in Germany and the longer your residence permit, the better chances you have when applying for a loan.
Foreign citizens with permanent residency in Germany get the highest approval rates.
To increase the chances of getting a car loan, apply for a term that isn’t longer than the duration of your residence permit.
How to apply for a car loan
The application for a loan is very straightforward. Depending on which type of financing you choose, you might submit it online, at the branch bank, or at the car dealership when purchasing the car.
Firstly you need to prepare a down payment of around 20% of the purchase price. If you currently don’t have enough money available, you can take out a small loan to cover it. Auxmoney and Smava are perfect resources for small amounts.
You will be able to get a loan even if you buy used cars from dealers and private sellers. However, when purchasing from a private seller, you will need to apply for a different loan.
This can be a standard installment loan, which will allow you to pay for the car. That way, you can take advantage of more favorable car prices from private offers and good private loan conditions.
After receiving the loan, you can simply transfer it to the seller’s bank account or pay in cash.
What is important for car loan application?
1. Credit Score (SCHUFA): Credit score is the most crucial factor when applying for a car loan in Germany. It applies to both – Germans and foreigners.
It can be secured by providing a stable job and regular monthly income in the country. Don’t forget to get at least 3 payslips from work.
2. Down payment: Clients are often asked to make a down payment of around 20% of the car price upfront. Only after will they be able to receive financing from the bank.
The rule is that the higher the initial payment for the car loan, the easier it’s to get a loan, the lower the interest rate, and the smaller the monthly payment.
3. Repayment duration: Depending on the price of the car and the type of loan you choose, you can select financing ranging from a period of 24 to 60 months. However, the length of your residence permit in Germany might play a role in the loan term.
Required documents for the car loan
Every bank and financial institution will ask for a particular set of documents before approving the loan.
In general, this includes:
- Passport or ID
- 3 last salary statements
- Copy of the car purchase contract or registration certificate II as proof of purchase
- Details on vehicle
- For self-employed persons and freelancers should submit at least 1 income tax statement, which isn’t older than 3 years
Within 4 weeks after the loan payment, a copy of the sales contract must be submitted to the bank. You can simply upload it in online banking or send it via email.
If you haven’t selected the car yet, you can still apply for a car loan without mentioning the payment date. In that case, the loan will be reserved for you, and the bank will pay out the borrowed amount in 3 months. Interest applies after the payment date.
Interest rates for car loans in Germany
In Germany, the average interest rate for car loans is 5,93%.
In 2021, interest rates are still at a low level in Germany. According to the Deutsche Bundesbank, the average interest rate for consumer loans in May 2020 was 5,93%.
Here is an example of current rates for car loans in Germany.
|Credit||Price of the car (loan) – 18,200 EUR|
|loan term||48 months|
|low-interest rate||2,24 %|
|average interest rate||3,99 %|
|high-interest rate||8,88 %|
Therefore, the difference between the lowest and highest interest rates for car financing is 6,64%.
Car loan with no job
In Germany, it’s very rare when a bank will give a loan to someone with no job.
Without it’s almost impossible to prove the applicant’s creditworthiness, leaving alone a good credit score.
Even people with an income, for example, who receive unemployment benefits, will struggle to get a car loan in the bank. The amount of unemployment benefits they receive won’t be enough to cover monthly installments, which are about 600 EUR in many cases.
The only option to receive financing without a job is to try to apply for a smaller loan.
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?