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Auto loan with a residual rate
According to a report by the BZ Berlin, the total amount of loans taken out in 2010 to refinance a car loan was 83.8 BZ. But even with the support of a conventional car loan or installment loan, which in practice is usually designed for a maximum duration of 84 months, the purchase of a car can become a great economic burden.
One way to reduce the monthly financing burden is to take advantage of the increasingly popular car loan with a residual rate, also known as a car loan with a final installment, balloon finance, or three-way finance. However, a car loan with a residual rate is also available from some other credit institutions. The car loan with residual rate is partly explained by its namesake:
In contrast to the conventional installment loan, the car loan is not repaid in full with a residual rate during the term, but a difference remains at the end of the loan agreement, which reflects the expected racing value of the vehicle financed at the time at the end of the contract. The remaining amount after the expiry of the loan agreement can either be repaid in a single sum or a new financing option can be used, with which the remaining partial amount can then be repaid in full.
Because the first car loan is designed in such a way that the remaining residual rate, regardless of whether an advance payment has been made or not, arises from the vehicle’s residual value of the vehicle, the option to call up the follow-up loan is available from the first loan approval. To ensure that there is still sufficient collateral for the subsequent loan, auto loans with a residual rate are offered for shorter terms, which can be between 12 and 60 months.
Variation of the car loan
The term car loan with residual rate is also used for a very special variation of the car loan: This form of financing is a combination of installment loan, residual interest loan and leasing model, which was initially developed by the automobile banks, but is now also offered by some other credit institutions becomes. Compared to the original car loan with residual interest, the triangle financing gives the borrower the advantage that, in addition to repayment of the residual loan from the cash assets or private vehicle sales, he has a third option:
In the case of three-way financing, the borrower is promised to take back or buy the vehicle at the amount required to repay the remaining loan when the car loan is bought and taken out.