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Car loan with final installment

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Buy a car with a final installment

A car is an expensive purchase that often takes a big bite out of your budget. You get a lot in return, so it is often a purchase that people find worthwhile. However, it is not always the case that you can pay the entire purchase amount of the car in one go. In that case you can opt for a loan . You can then take out a loan for the entire amount or opt for a car loan with closing date .

What is a car loan with closing date?

A car loan with final installment, also known as a financial lease, is a loan in which you pay a part of the purchase price later. This is the residual sum of the loan, the remainder that you pay as the final installment. You also pay interest on this final installment.
So it is a loan in every sense of the word. You pay this final installment at the end of the term of the loan. Because you have not yet paid off the loan, you are only the owner of the car when you have also paid this final installment.

Advantage loan with final term

The advantage of a loan with final term is that the monthly costs are lower, after all you paid but repayment on a lower part of the purchase price. The disadvantage of a car loan with final term is that at the end of the term, often after 3 or 5 years, you get another surprise in the form of a final repayment of the loan. This can be a considerable amount, often a third of the purchase price.
What some people do at that moment is to trade in the car, pay off the final installment with the proceeds and close a new car loan with closing time.

Buy a car with a final installment

In fact, buying a car with final installment is a kind of lease purchase. After all, you are only the owner when you pay the last installment. Often you can calculate online how much such a car loan will cost you, so you know in advance what the costs will be. When you have a fixed income, such a purchase is fine to do. Provided you make sure you put money aside for the closing period!

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Is money borrowing for a car sensible?

Whether taking out a loan for buying a car is sensible depends on your situation. It is therefore smart to calculate the costs in advance so that you know what you are stuck with. In addition, it is important to read carefully the conditions of the providers of the car loan with final term.
If the interest rate is too high, it is probably more worthwhile to opt for a personal loan .

Please note that you are the owner of your car only when you have paid off the car loan with final installment. So pay attention to the end date and make sure you have the last repayment period ready.
Another advice is to insure your car properly, so that in case of total loss driving of the car, the insurance still pays out and you do not leave with a debt.