How to get a car loan in Germany

This article is dated as shown. Laws, fees and prices have changed since then. Check the figures before you rely on them.

More than half of Germany's residents take out a loan when buying a new car, according to the Deutsche Automobil Treuhand (DAT, the German automotive trust). Leasing is also popular: 20% of drivers use it. The statistics for used cars are different: 40% prefer a loan and 2% use leasing. If you are thinking about additional financing and would like to understand your options, read this article.

What leasing really is

Looking at the statistics, we can see that a car loan is the more common choice in Germany. So what is leasing and who is it suited to?

Leasing and a loan come with different conditions. With leasing you need to check the term, the mileage, servicing, liability for damage and the return procedure. A purchase option should not be assumed to be included without a corresponding clause in the contract.

A leased car comes with an annual mileage limit that you may not exceed. That is why this form of rental is more attractive to companies than to private individuals.

To arrange it, you will need to show your company's accounting history, its profit and actual earnings, and provide documents proving that the company is active and has prospects.

Ways to get a loan

There are two ways to get a car loan from a German bank: contact the financial institution yourself or use the support of a car dealer.

A dealer is a professional trader who sells vehicles from a dealership or works as a sole trader. They have established relationships with banks. Financial institutions make them attractive offers because they understand that the dealer is the route to the buyer.

The rate, the term, the down payment and the insurance requirements depend on the lender's offer. Vollkasko (fully comprehensive insurance) may be a condition of a specific contract, but it is not stated as a general requirement of all banks. Before signing, ask for the list of conditions and the total cost of the financing.

• the loan is granted to adults only;
• a registered address in Germany;
• a current account with a German bank;
• documents confirming a regular income;
• a SCHUFA credit rating (a credit history with no negative entries).

You may also be asked for life insurance or savings set aside as collateral.

When dealing with the bank yourself, you need to:

• meet the agreed conditions;
• receive the loan funds;
• buy the car on credit and then pay the instalments regularly.

Loan calculations

A loan calculator will help you work out the amount and the interest according to the term and the car model. Enter all the details and you will get the monthly instalment. Bear in mind that a used vehicle is cheaper, but in that case be prepared for additional expenses.

If you are not sure how to arrange a car, a loan or a lease correctly, turn to professionals who will help you choose a car with reasonable running costs and sort out the paperwork for the car and the loan.