Poh, borrowing money for a car is quite expensive these days.
You only borrow money for a house. This typical Dutch attitude is something that many parents pass on to their children. And in many ways this is not so crazy. While borrowing money for a car is perfectly normal in many other countries, you see the Dutch opting for ordinary cash more quickly. This is mainly because interest rates in our country have never been super attractive.
Borrow money for a car
A few years ago, when interest rates were historically low, you could still find some of that. But now it’s actually as clear as a lump. Borrowing money for a car is a very expensive affair. Due to the rising interest rates, it is not at all attractive to take out a loan for a new or used car.
There is a big difference between lenders. You have the choice between expensive or even more expensive. From research of the financial comparison site Geld.nl it turns out that a loan from a lender is often cheaper. Moreover, the car is often the collateral if you take out a loan through the car dealer, while this is not the case with a lender.
The study shows that borrowing money from a lender is cheaper in more than 65 percent of cases. This means that in almost 35 percent of the cases, the dealer offers cheaper car financing. Then you still have to pay attention. For example, you have to deal with a mandatory final installment and/or a down payment for the car.
interest
But what is the interest on such a loan if you buy from the dealer? Take a seat for it. Based on a term of 60 months, loans range from 4.9% for a Renault Clio from € 22,795 to 9.99% (!) for an Audi A3 from € 37,620. In the latter case, the A3 will not cost 37 grand, but more than 47 grand. Most loans vary between 5 and 9% interest.
In order to get inflation under control, it is not inconceivable that the ECB will raise even more interest rates this year. As a result, there is a chance that you will have to pay more than 10% interest for a car loan.
Wise advice
Now I’m going to sit in the chair of a sensible parent. Don’t do it. Taking out a loan for a car is not at all attractive in this day and age. If you don’t have the money for your desired dream car, keep saving. Or do a concession and buy a cheaper copy. Good luck! Disclaimer for all agencies: This is not financial advice.
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