Borrow money for a car

If you are short on cash and want to buy a car, you can borrow money for this. There are various options for borrowing money to buy a car. For example, you can take out a personal credit for this. You could also take out a revolving credit. Even with a BKR registration/listing you can buy a car on installment. And it is also possible to buy a car on a hire-purchase basis.

Why borrow money to buy a car?

The big advantage of borrowing money to buy a car is the deferred payment. You pay a little every month, and the car seller often offers a low interest rate. This way you can still drive a nice new car and you do not have to bear the financial burden all at once, but you pay in installments according to your ability to pay. This is very easy. The major disadvantage of borrowing money to purchase a car is the total purchase price. If you borrow money, you pay interest on it. The final price you pay for a new car is often a lot higher than the initial sales price. It is also easier to consider all kinds of options for a car because you will still be paying off each month. After all, the extra options you buy are only a few euros extra per month. Therefore, wait before deciding when you want to buy a car. It’s better to think about it for a day than to decide right away. This mainly has to do with the emotion while viewing a new car. You are in a certain daze and can no longer think objectively.

Financing options for buying a car

You can finance a purchase in many ways. All financing can be summarized in 2 main categories: personal loans and revolving credit. The big difference between the two forms is that with a revolving credit you can withdraw the repaid portion again. There is a maximum limit for being in the red. You also have more flexibility in the loan with a revolving credit. The disadvantage, however, is the higher interest rate. The interest rate is lower with a personal loan.

Personal loan

  • repayment is a fixed amount per month
  • repayment consists of fixed amount + interest
  • loan depends on income and fixed costs
  • fixed, agreed term

Revolving credit

  • repay every month
  • repayment consists of amount + interest
  • The amount repaid can be withdrawn again
  • credit depends on the level of income and fixed costs
  • unlimited duration

The term of a loan

If you want to buy a new car on installments, you should think carefully about the term of the loan. It is a smart idea to adjust the term to the expected lifespan of the car. If the term of the loan is longer than the life of the car, you may end up with double costs. It is also wise to take out all-risk car insurance. If the car becomes a total loss through your own fault, you could get into trouble during the term of the loan. After the term of the loan has expired, you can adjust the car insurance to a lower coverage variant.

Buy a car on installment with BKR

Because car sales occasionally take a dip, more options have emerged on the market to buy a car on installment. This also applies if you have a BKR registration/listing. Car dealers are eager to sell cars, including to people who have a BKR registration. You must carefully consider whether the monthly costs are bearable if you want to buy a car on installments. It is important for the car dealer to know that you can repay the loan. If you can bear the monthly costs and you have a BKR listing, you can often still buy a car if you can prove that you have the financial capacity. Together with the dealer, you then draw up a solid plan in which financing is arranged.

Buying a car on a hire purchase basis

This form of financing is most similar to leasing. You enter into a kind of lease contract with the dealer in which you pay part of the new car. You can also often trade in your old car and thereby pay part of the new car. You then pay a monthly amount for usage. Please note, these amounts are quite high. The costs of maintenance and fuel are on top of that. The difference between hire purchase and a lease contract is the reclaimability of the car. With a hire-purchase contract, the dealer can immediately reclaim the car if you have missed a payment. This is not so easy with a lease contract.