Taking out a loan to make a special repayment?

Hello everyone,

somehow I don’t quite understand this...

We want to get a new car next year. I would have the money available in cash.

Now I saw that Ing-Diba offers a car loan with an effective rate of 2.99%.
If I now enter as an example that I want to borrow 25k and repay it in 48 months, it shows me a total amount of 26,534.69 EUR.

Yesterday, by chance, I looked at my construction financing account statement. We currently pay just under 3000 euros in interest per year.

So wouldn’t it make more sense to finance the car and use the cash directly as a special repayment, or am I mistaken?!

Best regards

Now I happened to look at my construction financing bank statement yesterday. We currently pay just under 3000 euros in interest per year.

If your outstanding debt were as high as €25,000, I could follow your reasoning. Otherwise not.

ING 2.99%, how high is your construction loan interest rate? That's the comparison.

You just have to calculate the interest savings you have after a special repayment within 48 months and compare that against the interest paid from the installment loan (1653€). However, the comparison is a bit misleading. 1 5% special repayment is usually possible at most. You would need to have an original loan of over 500,000€. 2 you also have to repay the installment loan. But you can also repay the loan the same way (buy the car in cash and save the potential installment and make a special repayment annually). That's about 520€ per month.

You just have to calculate how much interest savings you have after a special repayment within 48 months and compare that against the interest paid on the installment loan (€1653). However, the comparison is a bit skewed. 1 5% special repayment is usually the maximum possible. For that, you would need an original loan of over €500,000. 2 You also have to pay off / amortize the installment loan. But you can also amortize the loan the same way (buy the car with cash and save the potential installment, and make special repayments annually. That’s about €520 per month)

Exactly, I was obviously missing something
*embarrassing, embarrassing*..

But I’m also not an expert..

I saw it like this: with the special repayment of €9500, I basically save one year of repayments on the loan, so I thought that I would ultimately pay less interest.

The ratio of 1.8% on €185,000 is different than 2.99% on €25,000, but I did not take the increasing amortization portion into account..

But the loan calculator says the interest savings would be around €1070, so not worthwhile.

Thanks!

I guess I was completely confused there
*embarrassing, embarrassing*..

But I'm not an expert anyway..

I saw it this way, that with the special repayment of 9500 euros I would basically save myself 1 year of loan payments, so I just thought that I would ultimately pay less interest.

The ratio of 1.8% on 185,000 is different from 2.99% on 25,000. But I didn't take the increasing repayment portion into account..

But the repayment calculator says the interest savings would be about 1070 euros, so not worth it

well, one advantage would be that you would be "forced" to pay off the installment loan ^^