Loans and financing to buy a car

49 posts in this topic

I went to VW the other day because I want to finance a used Scirocco in Feb and the sales guy didnt know if i could be approved for the loan because my visa has an expiration date for April.

 

I told him that i can easily renew it because I have a decent income and I am a Freelance Business English Teacher. He was going to call Volkswagen Bank for me but never got back to me.

 

Has anyone with a unbefristet (not unlimited) Visa here got a car loan?

 

FYI im only looking to borrow about 10 or 11K

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This is an older discussion but maybe someone will see it. I am trying to buy a car (preferably VW Polo) with a 4-year loan. I talked to my bank, Deutsche Bank, and to the VW dealer. I was going to get the loan through Deutsche Bank. When the loan officer was doing my paperwork she noticed that while I have an unbefristet/"unlimited" work contract, my current visa is valid for one more year (I am going into my 3rd year in Germany. I had the 1-year visa and now I am in the middle of the first 2-year visa). We tried talking to VW about doing the financing but when they saw the visa expiration they also said they couldn't do it. I understand the reasoning; why give me credit for 4 years when it is of course possible I could leave or be forced to leave the country in 12 months. The Deutsche Bank loan officer is writing a kind of appeal to see if she can still do a loan for me.

 

Has anyone in a similar situation been able to get the loan they needed, even if their visa was short? Maybe the weight of the unbefristet Arbeitsvertrag even with the shorter visa was successful? Or were you able to apply for the next length of visa (4 years I think?) without having completed the 2-year visa? I think it is a bit strange that when I first arrived I was able to do a kind of "lease" (24 month financing, then give back or buy the car for the Schlussrate) for a car from VW for 2 years, having a 1-year visa and a 2-year work contract, with no down payment or anything. The financing was from VW bank. I also helped a new colleague do the same thing this week and it worked, no problems. Thanks for any advice (besides buy a car for cash. It is an option, not the one I want so much..).

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Hello all, I'm thinking of buying a car in Germany.  I'm a bit nervous about driving in Germany, as I've never driven outside England and I'm now entirely sure where I'd park it so I need to think about that quite a bit.  However, I miss driving, think it's about time I got on with it (I've been here for nearly two years) and it might also give me a bit of flexibility in terms of living options as Bonn is very expensive.  I like cycling but I'm hardly Bradley Wiggins.  How likely am I to get a car loan as a freelancer?  I'm saving up for a house deposit (two more years of tax returns before I can try and get a mortgage) so perhaps I could find a second hand car without needing a loan.  However, I wondered whether getting a bank loan for a car might help an eventual application for a mortgage.  Does it work the same way as the UK?  Just thinking, I don't have a credit card so perhaps this would help build a credit rating.  This isn't an urgent enquiry but can anyone advise?  Thanks, J

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 You also might need to think about auto insurance. It sounds as if you have not driven in the 2 years you have been here, so do not have a current  auto insurance? I am not sure whether this will mean higher premiums.  Good idea to contact an insurance expert to discuss the rates you might have to pay.

PS Couple of experts on TT- JOhnG, Starshollow. They willingly give advice.

 

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Thanks RedMidge

 

I have auto insurance in the UK but I don't suppose that'll mean anything here.  After a gap of two years in the UK, the rate went up to £500 after which the 9 years' no claims bonus was once again recognised and it went down to something a lot more comfortable.  Of course, I will have no "no claims" here so it's probably going to be more than the 200 euros a month someone assured me (he was trying to sell me his car at the time).  ;-)

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On 7/27/2016, 8:47:02, Julia_Writer said:

How likely am I to get a car loan as a freelancer?  

It depends on how long you've been freelancing here, your income bracket,  and how consistently you've been earning.

 

For example, the recently arrived freelancer struggling to earn 10,000€/year will not be able to obtain a loan whereas a freelancer who has been consistently earning over 100,000€/year for the past 5 years shouldn't have a problem(everything else being equal). 

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1 hour ago, Julia_Writer said:

  Of course, I will have no "no claims" here so it's probably going to be more than the 200 euros a month someone assured me (he was trying to sell me his car at the time).  ;-)

 

Some insurance companies will recognise, at least in part, your no-claims from the UK.

See if you can get a letter from your UK company confirming how many years you have been driving without making a claim, and then go and talk to insurance representatives personally.

 

As for taking out a loan to buy a car, well, personally, I am not a fan of living beyond my budget, so if I cannot afford to buy a new car, I buy an older one that I can afford, until I have enough saved in my "buy a car" fund, to actually buy the one I really wanted.

Just my 2 cents.

 

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Well that's good to know, Robinson 100, thanks!  I wouldn't dream of buying a new car and I don't really have a preference beyond economical to run and the requisite number of wheels so it may well be doable.

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Thanks Engelchen,  sadly not up to 100k.  Would be looking to borrow a very small amount just to give me a credit rating.  Otherwise would avoid debt altogether.

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3 minutes ago, Julia_Writer said:

Well that's good to know, Robinson 100, thanks!  I wouldn't dream of buying a new car and I don't really have a preference beyond economical to run and the requisite number of wheels so it may well be doable.

 

- "small" might be good, too, since you mention not knowing where you would park...

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3 hours ago, Julia_Writer said:

Well that's good to know, Robinson 100, thanks!  I wouldn't dream of buying a new car and I don't really have a preference beyond economical to run and the requisite number of wheels so it may well be doable.

AS you have had insurance in the UK, as suggested- get a letter from them stating how many years claim free you had.

WE used a letter from Canadian Insurance for German Insurance and the annual cost was reduced.

 

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4 hours ago, Julia_Writer said:

Would be looking to borrow a very small amount just to give me a credit rating.  Otherwise would avoid debt altogether.

 

You do not seem to be aware that things do not work like that in Germany.

Here, the less loans (and credit cards also count as loans) you have, the higher your credit rating.

Your credit rating also depends on things like how often you have moved (if you move, your credit rating sinks), and on the area you live in (if it is a "good" area, where the inhabitants are known not to default, your credit rating rises).

 

The German credit rating agency is called Schufa: https://entwickler.de/online/webmagazin/what-is-schufa-and-why-do-i-need-it-1125.html

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Thanks PandaMunich,  I didn't know that.   I've never taken out a bank loan in my life so it’s rather a relief that it's not a requirement to "build" a credit rating.  It also gives me a reason to stick it out in the WG for a while.

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2 hours ago, PandaMunich said:

 

You do not seem to be aware that things do not work like that in Germany.

Here, the less loans (and credit cards also count as loans) you have, the higher your credit rating.

Your credit rating also depends on things like how often you have moved (if you move, your credit rating sinks), and on the area you live in (if it is a "good" area, where the inhabitants are known not to default, your credit rating rises).

 

The German credit rating agency is called Schufa: https://entwickler.de/online/webmagazin/what-is-schufa-and-why-do-i-need-it-1125.html

 

It works like that in the UK too.

1. Having few loans (including credit cards) and using a low percentage of your to aggregated credit card limit improves your score

2. Your post code is taken into consideration, just as it is Germany. This is different in the US, where credit discrimination based on where the applicant lives is illegal.

 

But I think what the OP's point is slightly different. She's assuming that having a history of a small loan that was repaid would yield her a better credit rating than not having a loan on record. I am not sure if that's the case but I suspect she's might be right.

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I doubt it, that's not among the measures listed to improve your credit score at the end of this article.

This lawyer explicitly says that taking out any loan hurts your credit score: "Schließlich wirkt sich jede Kreditaufnahme oder Aufstockung von Kreditrahmen negativ auf den Score aus.", so I assume that paying off that small loan would, best-case, just get her rating back to the way her rating was pre-loan.

 

Taking out a small loan could be interpreted even worse: she didn't even have that much money if she needed to take out a loan for such a small amount. 

I know it's unfair, but when dealing with banks, the general rule applies: the less you need a loan, the more eager the bank is to give it to you, and at a lower interest rate, too ;)

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On 8/29/2015, 9:39:49, margaritalane said:

This is an older discussion but maybe someone will see it. I am trying to buy a car (preferably VW Polo) with a 4-year loan. I talked to my bank, Deutsche Bank, and to the VW dealer. I was going to get the loan through Deutsche Bank. When the loan officer was doing my paperwork she noticed that while I have an unbefristet/"unlimited" work contract, my current visa is valid for one more year (I am going into my 3rd year in Germany. I had the 1-year visa and now I am in the middle of the first 2-year visa). We tried talking to VW about doing the financing but when they saw the visa expiration they also said they couldn't do it. I understand the reasoning; why give me credit for 4 years when it is of course possible I could leave or be forced to leave the country in 12 months. The Deutsche Bank loan officer is writing a kind of appeal to see if she can still do a loan for me.

 

Has anyone in a similar situation been able to get the loan they needed, even if their visa was short? Maybe the weight of the unbefristet Arbeitsvertrag even with the shorter visa was successful? Or were you able to apply for the next length of visa (4 years I think?) without having completed the 2-year visa? I think it is a bit strange that when I first arrived I was able to do a kind of "lease" (24 month financing, then give back or buy the car for the Schlussrate) for a car from VW for 2 years, having a 1-year visa and a 2-year work contract, with no down payment or anything. The financing was from VW bank. I also helped a new colleague do the same thing this week and it worked, no problems. Thanks for any advice (besides buy a car for cash. It is an option, not the one I want so much..).

 

Hi @margaritalane

So did you eventually succeeded in getting a loan for your car? I am into similar situation as you described and not sure what to do. I am planning to buy a used car and have unlimited contract in Germany. I am living in Munich for 1.5 years now and have no other credit apart from a mobile phone contract on my name. My passport is getting expired in March-2018 and hence my Blue card Visa was issued till that date. The KVR guys told me that once I get a new passport they will update the visa in new passport.

 

Now I am just wondering if I apply for a credit like personal loan or loan on used car from dealer for 3 years, will it be successful. If not is there any other option.

 

If nothing works, I might have to lend money from 2-3 close friends and return them in couple of months, but getting a loan would be better option.

May be I can try a loan from my bank where I have salary account.

Thanks,
Vicky

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different type of question on the same topic...

 

when taking a car loan, who is the owner of the car until the loan is re-paid? Would i be at least co-owner ? ( i am putting in half of the car value)

In case this is a bank, would i be put as an owner only from the date of when loan is re-paid?

 

Need those details to determine if i can be exempt from an import tax if i decide to export the car once loan is re-paid.

 

Usually, are there any restrictions where car can be driven if its financed by a bank ? (across Europe).

 

thanks for advices.

 

 

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