Car loan with no processing fee – so you get it

In the market for car loans, there is always a whole range of offers, which advertise with various benefits. The providers try in many ways to outperform or undercut each other in terms of benefits and borrowing costs. As a consumer, therefore, one should confine oneself to a few essential features when comparing different loans. One point to watch for is the processing fee. For a car loan with no processing fee initially allows the conclusion that the credit is cheaper overall. But whether cheaper or not, must be determined by other characteristics.

What advantages does a car loan with no processing fee?

Of course, once a fee is lost, it means less cost to the customer. Processing fees are charged on most loans and are intended to cover the cost of lending. Of course, these can vary, depending on the bank. Customers are usually offered two interest rates when comparing loan offers: nominal and effective rates. Ultimately, the effective interest rate is decisive for the calculation of the actual costs, because all costs have already been included here. This is therefore almost always above the nominal interest rate (also called borrowing rate by some banks).

If the processing fee now disappears, the difference between the nominal and the effective interest rate will also be lower. In plain English: The credit becomes cheaper. The savings depend on the average amount of processing fees, which reduces the cost of a car loan with no processing fee by about 2% to 4%.
Since the effective interest rate includes almost all borrowing costs, it can be used excellently for comparison purposes. So can be relatively quickly and easily checked whether the car loan without processing fee is really cheaper than comparable offers with a fee.

Where can I find a car loan without a processing fee?

It is possible for virtually every credit institution to offer a car loan without a processing fee on a permanent or temporary basis. For some, the probability is higher, for others it is lower. If you want to search for such a loan, you should start with the direct banks. These usually do not have a dense network of branches, but only one company headquarters or a few branches in larger cities. Such companies therefore operate at significantly lower costs. An advantage that is gladly passed on to customers. By eliminating the branch operation, the costs of processing for the company and thus also the processing fees for the customer decrease.

Another way to find a car loan with no processing fee can be found at the Autobanks. The conditions offered here undercut those normal commercial banks relatively frequently. However, certain restrictions have to be accepted for car banks: Some financing offers are linked to specific vehicle models. In addition, the borrower can not act as a cash payer by financing through the car bank at the dealer. This should be taken into account in your own calculation to determine whether the omission of a processing fee outweighs this circumstance. In addition, lending to auto banks can often be agreed only for the purchase of a new car. On the other hand, if you are looking for a used car, you can easily lose your way and should immediately check the offers of direct banks.

Even ordinary branch-based commercial banks can offer a car loan with no processing fee. As with other loans, it is important to make a close comparison. Due to the large number of loan offers, a large number of loan calculators or credit comparisons can be found on the Internet with which offers from specific manufacturers can be compared quickly and easily. Under no circumstances should a loan be concluded hastily because no processing fee is required. In practice, there are plenty of examples in which a loan is just as expensive or even more expensive than comparable offers. The highest decision criterion is and remains therefore the effective interest rate.