The customer can opt for further financing or must return the car.
Why the final installment is funded
For a car loan with a final installment, the customer initially only thinks about the low installments per month. These are paid to pay for the loss in value. A loan seeker who has balloon-funded a vehicle for five years ends up with a very high closing rate. Depending on the purchase price of the vehicle, this may well be between 10,000 and 15,000 USD.
Most of the consumers cannot pay off the final installment and have to finance a final car loan installment. It is rarely possible to save that much money in the short term of the term. Some have a one-time payment that can cover the sum. But it very often happens that the money is not available.
What does the further financing look like?
If you want to have a car loan final installment financed, you have to take out an installment loan. To do this, he first has to find a lender who is willing to lend the amount to the applicant. The customer is checked again whether he has the required creditworthiness. Only those with a good credit rating can start follow-up financing.
The installment loan has higher monthly installments. It should be calculated exactly whether these are also affordable. Customers with a low income could already have problems here. If you don’t get a loan, you will have to sell the vehicle. The final installment is then repaid with the sales value. However, the selling price is often not enough and a loan must also be taken out for the remaining amount.
With poor creditworthiness for follow-up financing
Not everyone can afford to have a car loan final installment financed. But follow-up financing can also be taken out with poor creditworthiness. To do this, the customer must find a second borrower who also signs the installment loan. If the remaining amount is less than 10,000 USD, a surety can also be chosen. This must have a good credit rating, otherwise the follow-up financing would not be adequately secured. He will also be checked.
The bank will use pay slips and bank statements to check whether the loan security is adequate or not.
Financing car loan final installment – loan calculator
In order to have the car loan final installment financed, the right loan must be found. A loan calculator on the Internet shows exactly who offers a cheap loan. In addition to the loan term, the loan amount should always be specified. It is helpful to send a non-binding request to several banks.
Since the customer has to state his salary, an interest rate is displayed that comes very close to that in the contract. This enables the customer to calculate precisely whether the loan is affordable for them. Details show whether a co-applicant is possible or not. Since follow-up financing is often very high, special repayments and installment breaks should be considered.
Advantages and disadvantages
The advantage of follow-up financing is that the vehicle does not have to be sold. A major disadvantage is that this financing is far more expensive than the installments that had to be paid in advance. It is not always clear whether the customer really gets a loan. Having a car loan final installment financed is also very unsafe.
The customer should take care of further financing in good time.