It is now almost exactly 1 year ago that the so-called ‘0% loans’ from car dealers were banned.
In September last year the AFM found it nice with these car loans at an interest rate of 0%. Supervisor AFM found these loans misleading.
With a loan without an interest rate, customers can think that no extra costs are charged when entering into a loan obligation. In practice, that was the case. Car buyers (and therefore borrowers) also had to pay high costs for the 0% loan for cars. The AFM quickly put a stop to this. Dealers are no longer allowed to offer such misleading loans today . How is it now, 1 year after banning these loans?
Shift in the area of borrowing is noticeable
For the dealers themselves, the ban will certainly have had consequences. But now the car sales are on the rise again. The Dutch consumer still makes grateful use of car loans . But things have changed since September last year.
Less revolving credit – more personal loans taken out
Since last year, consumers have clearly made far less use of the revolving credit as a car loan. On the other hand, the personal loan is extremely popular. That will have to do with the low borrowing rate. With the personal loan it is possible to secure the loan interest for a longer period. People have clearly learned their lessons from the credit crisis. They opt for clarity and safe borrowing. With the personal loan everything is clear in advance. For example, the term is known and the interest rate does not change during the term. On the end date of the agreement, this car loan has been paid off and you are debt-free …
Finish financing at car dealer
Car dealers still offer financing. For a new or used car, you can lease or buy a car with them on payment. A new type of financing is the so-called ‘fifty / fifty deal’. You can read more about leasing and installment payments below.
With leasing you can choose to purchase an extensive package. You pay a fixed amount every month. Repairs and maintenance are covered by your contract. So you do not have to worry about that. With this type of car lease you basically rent a car. It is often possible to take over the car after the lease term for a certain amount. We also call this form of lease operational lease.
Buying a car on installment
With purchase on installment it is also possible to finance a car. In this case, you are also not the owner of the vehicle that you ‘buy’. However, you will automatically become the owner if you have paid all repayment terms. The advantage of leasing and buying on installment is that you have access to a new or used car directly. You do not have to pay a high amount of money in one go. With operational lease you pay monthly rent, as it were. When buying on installment you pay the car in installments.
Buy on installment or loan?
If you can finance a car with a personal loan, you should always do that. You then pay a lower interest rate than when buying on installments. You are also directly owner of the car.