Should you borrow for a new car?

Many Danes choose to take out a car loan when the old one needs to be replaced or when they have to buy an extra car. So one can say that car loans are very common. Are you considering taking one yourself? Then you may well get acquainted with the subject before applying for a loan. You can find all the necessary information here on the page where you can read about price, maturity, types of loans and much more.

What does a car loan cost?

What does a car loan cost?

Let’s start with the numbers, because how much does it actually cost to take a car loan? Of course, all loans are different, so it can be difficult to say anything in general about what your loan will cost in fees and interest. However, there are some costs that are fixed and thus apply to everyone. If it is necessary to provide security for the loan, then these three fees will always be present:

  • Stamp duty of 1.5% of the amount borrowed
  • Registration fee of DKK 1,400
  • Fee mark for the insurance of DKK 750

Let’s say you want to borrow 150,000 to buy a new car, so at least you know you have to pay 2,250 + 1,400 + 750 = 4,400 dollars in fees.

It is often the case that there are some loan providers that promote themselves through low interest rates and some others that advertise low fees. Whatever the final price, you will need to do a little more work to investigate, but this will help you further down the page.

How long is the maturity?

How long is the maturity?

How long will you pay off your car loan? It is very different how long the term is, but there is one important thing to keep in mind when choosing the term of the loan.

A car decreases in value relatively quickly, and therefore you must choose a maturity that matches this decline in value. The impairment is closely related to how far you drive in the car, and you can have a rule of thumb to choose maturity here:

If you drive between 10,000 and 20,000 kilometers a year: 6-8 years running.

If you drive between 20,000 and 40,000 kilometers per year: 5-6 years running.

If you drive between 40,000 and 60,000 kilometers per year: 3-5 years running.

The above is just an estimate and it is most accurate if you buy a car that is new or almost new.

In addition, you must of course consider how much you can afford to pay off the loan each month. Of course, choosing a maturity of 36 months is of no use if you cannot afford to pay the high installments.

Where do you take your car loan?

Where do you take your car loan?

Where do you want to take a car loan? And where do you find the best? You have several options. Here are some of them:

  • Loans in the bank
  • Car loans online
  • Financing at Car Dealer

All these three loan methods are quite popular. But how do you choose the right one? When choosing a car loan, or any other loan, it’s about finding the loan that matches your finances and your needs. This applies to both the terms of the loan and the price. But how do you find this?

Here’s how to find the best car loan

A good way to find the loan that best suits you is to compare car loans online. When you compare different loans, you can easily form an overview of your options and find the loan you like best.

The cheapest loan will often be what most people prefer, but you should also look at the other terms so that you are sure that both the maturity and the monthly repayment match your finances.

You can try to compare the loan OPEN. Once you find a few different loans with a low APR, you can read more about them and see how the rest of the terms match you and your situation.

The difference between car loans and consumer loans

When comparing loans on the web to find the cheapest, it is important to remember to distinguish between car loans and consumer loans. Often you will find a car loan at a lower price, but you may also be lucky to find a very attractive consumer loan. Keep this in mind when searching:

  • You may want to use a consumer loan to finance a car
  • Do not use a car loan to finance consumption

So if you end up taking a car loan, then it should be spent on buying a car – and it doesn’t matter if you borrow online or at the bank.

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