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Car Loan – Which One to Choose?

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When deciding to buy a car, we have several solutions to choose from. Of course, it would be ideal to buy a car without borrowing for many years, but not everyone can afford it and in this situation, we have to help using bank loans. If we have already decided to take out a loan for this purpose, we still have to decide whether we want to use a loan with a balloon installment, a 50/50 loan or a standard cash loan.

Which loan should you choose?

Which loan should you choose?

Certainly, none of us before making a decision to take out a loan to buy a car knew about this topic because it did not have such a need. However, if we want to take out such a loan, we are forced to check and compare all offers. As it turns out, we can enlist a loan to buy a car in many banks, and we can pay it in several different ways. Here they are.

Standard car loan

Standard car loan

This car loan is repaid in principal and interest installments. The loan amount is transferred to the seller’s account, the collateral is established, then we receive a repayment plan for 5 or 6 years and we repay the debt. We can finance this loan with new and used cars, or imported from abroad. The collateral for this loan may be a registered pledge.

A loan with a balloon installment

A loan with a balloon installment

We can borrow this loan from banks related to car import. The loan is differentiated by the design and the clients it is addressed to. If we decide on this type of loan, we pay, for example, 20%. the value of the car, in monthly installments paid for example for 3 or 4 years, we pay 50% the value of the car, and finally we have the so-called balloon installment of 30 percent. We have three options then the first is to leave the car in the dealer’s account, the second is to pay the balloon installment once or in installments. Therefore, the loan with a balloon install is intended mainly for people who want to exchange their car every few years for a new one.

50/50 loan

50/50 loan

This type of loan is offered primarily by Autolender, however, the 50/50 offer can also be found in some traditional banks. The principle of such a loan is very simple. Before picking up the car we pay half the value of the car and after one year the other half. We can also spread the second part of the liability into installments that are interest-free. This does not mean, however, that the loan will be free. For granting such a loan, we must pay a commission and bear insurance costs. Similarly, the situation looks at taking 4 × 25 loans, or more and more frequently, 3 × 33 loans.

Each of these solutions has its advantages and disadvantages. Which of them we will decide on and which will be the most beneficial for us depends only on our individual needs and on what we expect from the bank and on what amount of credit we want to decide. Before making a final decision, however, it is worth consulting a banking adviser who will certainly help us make the final decision.

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