Buying a car on credit: Good idea?

7 October 2022

Whereas new cars were often paid for in cash in the past, customers nowadays usually opt for special financing models. These include, for example, buying on credit or leasing. But it is advisable to buy a Car on credit to buy? In this article we clarify the answer to this question.

Difference between leasing and credit

Leasing

More and more cars are being leased in Austria. Current statistics show that almost every 3rd vehicle is leased.

In contrast to the classic car purchase (or car purchase via credit), with leasing you are not the owner of the vehicle. The leasing installments are paid so that you can use the car. You pay the depreciation of the car, so to speak.

The monthly cost depends on various factors, such as the down payment at the beginning, additional services (tires, etc.) and mileage.

After the leasing contract has expired, you have two options. Either you return the vehicle or you buy it. The price for the purchase is determined by the residual value. The lower the monthly installments, the higher the residual value.

Buying a car by leasing is especially suitable for people who always want to drive a new car and do not care if they actually own the vehicle themselves.

With leasing, it should also be noted that it is problematic to get out of the contract. Loans are easier to terminate.

Credit

Credits can be used for various things (eg. Real Estate or even cars) can be borrowed. Buy a car on credit should be especially those who care about the property.

If you want to be the owner of a car, you can take out a loan. Since you then pay the seller the full amount already at the time of purchase, higher discounts are possible.

Since there are often restrictions with leasing contracts (car must be fully insured, exact mileage limits), buying on credit is also suitable if you are a frequent driver and do not want to spend money on fully comprehensive insurance.

We recommend buying a car on credit, because you usually get better conditions at the dealer and there are no restrictions during the use of the vehicle. Moreover, (unlike leasing) you are already the actual owner of the car from the very beginning.

Both variants have advantages and disadvantages. In any case, however, you should read the fine print very carefully and compare offers.

Where can I find a suitable car loan?

In order to get a good offer for a car loan, you should compare the conditions of different banks and then decide on a provider.

Our Car loan calculator helps you with this: Simply select the loan amount, desired term and planned purpose and click on "Calculate". The calculator then compares the offers of all banks in Austria in an instant and then suggests suitable offers.

Example:

You can find more information on the topic of car financing in the Süddeutsche article: Financing the car correctly