4 ways to finance your car purchase

Most people who buy a car don't have all the money ready, just like that, but need to borrow some of the money in one way or another. But what is actually the best way to finance a car? Well, it depends.

How and in what way it is best for you to finance your car purchase largely depends on your financial situation.

Car loan

When you take out a car loan from either a car dealer or a bank, a cash deposit of at least 20 percent of the car's price is required. And when you buy it, your car is registered as collateral for the loan. This simply means that the lender can sell your car if, in the unlikely event, you are unable to repay the loan.

Do you want to finance your car purchase through a car loan ? We at Kvdbil sell around 26,000 cars a year and therefore have the opportunity to negotiate a favorable car loan for you when you buy a car through us. You can feel safe in the knowledge that we cooperate with DNB Finans, one of the leading Nordic players in banking, finance and insurance. Let us handle all the paperwork - so you can do other things!

Using your existing mortgage may be an option

Extend your mortgage

If you own your home, and it is not fully mortgaged, you can apply to increase your mortgage by the cost of the car purchase. Currently, you can borrow a maximum of 85 percent of the value of the home. The new amortization rules state that mortgages between 50-70 percent of the value of the home must be amortized by 1 percent per year. Mortgages over 70 percent of the value must be amortized by 2 percent. In addition, if you borrow more than 4.5 times your annual gross income (salary before tax), you must amortize an additional 1 percent of the total loan amount.

It is possible for the lender to make exceptions to the amortization requirement for additional loans, but this can only be done if the total loan amount does not exceed 4.5 times the household's total gross income.

Personal loan

When you take out a private loan, or a so-called blank loan, you do not need to have any cash down to buy a car. The loan is taken out without collateral and is neither tied to the car nor the home. The collateral consists only of you having a job and an income that the lender believes will be enough to pay off the loan. Here, the interest rate is usually significantly higher, compared to other types of loans.