There are many ways to fulfill your wishes. Many use a loan for this. But these too differ from each other. A loan with a residual rate is becoming increasingly popular among consumers. But what is behind such funding?
The differences between the forms of credit
With a classic loan, the monthly installments run until the end. After that, the loan is paid off. A loan with a residual rate is a loan model that enables small monthly installments. At the end of the term, the remaining amount of the loan is then paid. This has the advantage for the consumer that the monthly charges for repaying the loan are kept low. However, this makes the financing a little more expensive.
When is such funding used?
As a rule, a loan with a residual rate is chosen to finance a car. The point is that even households with a small income can finance a car in this way. With a conventional loan, the terms are limited. In the other variant, a residual loan amount remains after the term has expired. The borrower has the option of either paying this in one sum or applying for new financing for the remaining amount. Such borrowers don’t care that this variant drives up the purchase price of a car. You want to keep monthly payments as low as possible and are willing to pay a little more for them.
Meaningful or not?
The car banks that offer such a loan with a residual rate primarily benefit from this financing model. For people with a higher income, this model is rather uninteresting. For everyone else, a loan with a residual rate is often the only way to finance a car. It is also an instrument of customer loyalty for the car banks, because with this financing the car buyers are tied to a specific car manufacturer. This is not the case with a conventional loan, because after the financing has been concluded it is not said that the buyer will buy his next car again from the same automaker.