All borrowing costs are often included in the annual percentage rate. This way, the customer can know exactly what costs will be incurred.
Credit fees – what’s behind it
No bank grants a car loan without earning money. Contracts are often signed without reading the documents in minute detail. Some lenders are still trying to include the processing fee. These processing and credit fees are intended to cover the costs of the credit check. A court had already ruled in 2014 that a car loan had to be processed without processing fees. These costs must not always be passed on to the customer.
Should the customer determine after the loan has been concluded that these processing fees are included, these can be reclaimed. However, there is a limitation period that must be observed.
Refunds to customers who took out a car loan years ago can amount to several thousand USD.
Why do a loan comparison?
Even if a car loan is offered without a processing fee, it does not mean that the loan is cheap. The annual percentage rate can be found in a loan comparison. Since this includes all costs, it should be as low as possible. Most offers depend on the credit rating. So the interest rate that is given first can still change. Banks often try to get the missing processing fee back in elsewhere.
Where previously special repayments were free of charge, one or the other provider will now cost money. The same applies to breaks in payment. Therefore, a loan comparison is very important. The customer can see all the details of the loan and think carefully before signing the contract.
If the loan ends up becoming too expensive, a new loan comparison should be carried out. Offers with the processing fee are no longer allowed!
Avoid mistakes – be careful
To get a cheap car loan without a processing fee, the loan amount should be known exactly. It often happens that consumers borrow too much money that is not needed at all. The higher the sum, the longer the interest has to be paid. The term should be kept as short as possible.
Every month more means that interest will accrue every month. Anyone who can should therefore pay as much as possible for the car loan without a processing fee. The monthly charge is then higher, but the loan is quickly paid off. The creditworthiness must be present.
If not, it will be paid dearly with high interest rates. Still, someone with bad credit can take out a loan and save money.
With bad credit to credit
Even with poor credit, there are chances of getting a car loan without a processing fee. The bank is reluctant to grant a loan to these people. But if you prepare, you have enough credit collateral to adequately secure the loan. To do this, you first have to consider why the creditworthiness is poor. Banks rarely provide information on this. So it has to be considered whether it is credit bureau or income.
Little can be done about income. If you can, you should take a part-time job for a long time. With this, the total income can be increased. But the credit bureau can also be improved under certain circumstances. However, this only works if reminders are paid or incorrect entries are deleted.
In order to be able to view all entries, self-disclosure must be given. This is possible on the Internet with a form and is free of charge once a year.
Car loan without processing fee – pay car in cash
A car can be paid in cash even if a car loan is taken out without a processing fee. To do this, the customer may not take out the loan from a car dealer.
A third-party bank on the Internet is more suitable for this. The money is transferred directly to the dealer at an auto bank. With a direct bank, however, the customer gets the money into the account. He can withdraw this and pay it to the dealer with the notes. This always gives customers a good discount.
Either the dealer waives some of the purchase price or offers another service that is then free of charge. In any case, the customer will benefit from paying the car in cash.