Loans come in many different forms and for just as many different purposes. And so there are also loans that are agreed with a final installment. This agreement is concluded if a loan still has a remaining debt at the end of the term and this cannot be repaid with the help of follow-up financing that takes place immediately.
Auto loans are usually at a final rate
A loan with a final installment is often a car loan. This has several key advantages for the borrower. Because the slightly higher final installment enables the bank to grant it very favorable interest rates for the loan. These low interest rates are what prompt many people to finance a car. If this were not the case, many would not be able to buy a car at all because the monthly costs would be too high.
If you decide on a so-called “three-way financing” for the loan with the final installment, you have three different options at the end of the term to repay the final installment. On the one hand, you can return the vehicle. The final installment can also be paid or further follow-up financing can be agreed.
Advice in advance saves a lot of money
If you opt for a loan with a final installment, it is advisable to use thorough advice in advance. The loan provider can disclose all the facts about this type of loan and you can individually negotiate the amount of the final installment. In addition, it is already possible to mark out the possible path after the regular end of the term, so that there are no nasty surprises afterwards.
Because it is important here that you do not take over financially. What use are cheap monthly installments if the final installment cannot be paid in the end. Therefore, you should carefully inform yourself about the advantages and disadvantages and weigh both against each other. In good advice, this is easily possible, since the credit provider is also not interested in having to give up his money in the end.