Germany is still a car country. But not everyone can easily afford their own car. But even for people with poor credit ratings, the prospects for a car loan are not so bad.
The car is of enormous importance in a country like Germany. This applies in private life and even more so for the professional existence. And so almost every adult person in this country is dependent on a car. The credit behavior of most Germans is exemplary. Just who has a bad credit rating, but is justified the question of whether he even gets a car loan or has to resort to other ways. Fortunately, there is good news in this regard.
Who has to fight with a bad credit rating?
Unfortunately, it is often a mystery how banks judge the creditworthiness of potential customers. Sometimes it’s not even their own financial or payment habits that mess up their loan application, but simply the fact that the bank is tracking a scoring model. This means nothing more than that they include the living environment in the credit rating calculation. So whoever has bad luck with his neighbors, often looks in the tube. However, not only people with negative credit bureau entries belong to the circle of those who have problems with the credit application. Many banks also rate the creditworthiness of freelancers, the self-employed, temporary workers and even whole groups of workers per se as bad.
Car loans are easier to get than other consumer loans
Since a car loan is no ordinary consumer loan, the chances of a loan commitment are relatively good despite its poor credit rating. Why? Very easily. Unlike a simple consumer loan, which can be used either for the purchase of furniture, consumer electronics or the holiday in the south, the car loan is earmarked. In this way, the financed vehicle serves the bank as collateral.
Thus, if the borrower can not service his installments, the bank can withdraw the vehicle and at least redeem most or even all of the outstanding debt through the sale. As the risk to banks is significantly reduced by the deposited value, even citizens with poor credit ratings are more likely to get a car loan than a normal consumer loan. , An overview of car loans despite credit bureau shows the different conditions. Often, however, banks require a corresponding partial or fully comprehensive insurance so that the value of the vehicle is maintained.
How do I get my car loan despite poor credit rating?
Usually the financing works either through the house bank or a direct bank. However, the probability of success is greater when financing through a car dealership or car bank. This is especially true if the borrower decides on a weak sales model or a phasing out model that still needs to be sold. The loan financing ultimately serves to maximize sales.
Easier conditions often apply to used cars that have been on the dealership’s yard for some time now, or in the case of a high down payment in the range of around 30 percent. If that does not work because of a too bad credit bureau score, you can still seek a personal loan from friends, acquaintances or relatives.