Calculate car loan with final installment – how it works

A car loan with a final installment is a form of financing specifically tailored to car purchases. It is also known under the terms balloon financing and final financing . For consumers, the car loan with closing rate for a special reason is very popular: The final installment financing is to lift even with low monthly installments.

balloon financing

The rates that the borrower initially has to pay are quite low. In the end, however, a relatively large final sum is due. This can be compared symbolically with a balloon. Hence the term balloon financing.

Car loan with final installment in three phases

  1. Sign the financing contract and use the car
  2. Pay monthly installments with a fixed interest rate
  3. Pay final installment or choose follow-up financing

With the final installment financing, the consumer can already use the car as soon as the financing contract is signed. From this point in time monthly payments have to be made. An interest rate is set for the amount of the installments. At the end of the agreed term, a final installment will be due. This closing rate will not be redeemed during the term. Instead, it is paid in the form of a one-time payment. Some car loan providers also allow their borrowers a so-called three-way financing.

Three-way financing

In the case of three-way financing, borrowers have different options at the end of the term. First, you can pay the final installment here, as described above, with a one-time payment. If the borrower does not want to keep the car at the end of the term, it is possible to return the vehicle to the dealer. This is especially suitable for people who can not afford a high final installment or follow-up financing. Even people who only need a car temporarily benefit from this opportunity. The third option of three-way financing is follow-up financing.

follow-up financing

After the interest rate commitment of a loan expires, there is often still a residual debt left. To settle the remaining debt, a new financing with a new fixed interest rate can be agreed at this time. This replaces the old contract.


Even though the loan amount, the term and the lending rates are identical, closing-rate car financing can often be more expensive than a standard installment loan. The cost increase results from the deferred payment and the associated interest.

Consumers should not be fooled by the low interest rates and lose sight of the closing rate. It should therefore be taken into account when comparing with other financing options. However, the higher costs of this type of financing should not be misinterpreted. For low budget borrowers, lower monthly payments offer a big advantage. In favor of lower monthly installments, you have to accept the slightly higher overall costs for car loans.


A car loan with final installment is best recommended for used car purchases. That’s because the loss of value here is not as great as with new cars.

Calculate car loan with final installment

In contrast to a conventional annuity loan car loans are usually more expensive with closing rate. The cost increase results from the deferred payment and the associated interest.

In order to check whether a car loan with closing rate is suitable for its own purposes, consumers should make a credit comparison. In a credit comparison, offers for conventional car loan annuity loans and final installment financing can also be compared.

For the calculation of the final rate, the various credit calculator or car financing calculator on the Internet are suitable. Here, consumers provide information on the desired loan amount, term, loan interest, final installment and what the loan should be used for. Subsequently, prospective clients receive a clear list of current loan offers.

advantages disadvantage

Low rates and low starting capital necessary

Usually cheap interest rates

Payment of the final installment unproblematic

The initially low rates are tempting

the final installment still needs to be funded.

Overall, more expensive than an ordinary installment loan


A car loan with closing rate has both advantages and disadvantages. Often, consumers like to choose this type of financing because initially only small installments are payable. In some cases, starting capital is not even necessary. Another advantage of such a loan are the often favorable interest rates. In addition, the payment of the final installment is usually unproblematic. The loss in value of the car is already paid with the previous installments. The amount of the final installment will therefore not change any more. However, one drawback to funding with final installment is that this type of funding is more expensive overall. In addition, the fact that the relatively high closing rate must be financed. Therefore our tip:


Set aside monthly money for the final installment. So you do not have to spend that much at the end of the term.

Car loan with closing rate – Santander Consumer Bank

The Santander Consumer Bank is Germany’s largest independent automotive bank. The so-called “CarCredit” of Santander Bank offers two options for financing. First, consumers can finance their new dream car with a classic loan. Here, the monthly installments remain the same until the loan is paid off. The future car owner can choose the duration flexibly (between 12 and 96 months). In addition, there is the BudgetCredit, which can be equated to the balloon financing. The interest in this case depends on the duration.

Cheap car loan with final installment: Helpful hints

Compare different providers with each other

You can compare different providers online. So you have the opportunity to calculate the terms of a loan in a car loan calculator with closing rate. Then you can weigh the different offers against each other and choose a solution that is best for your individual situation.

Compare the different types of car finance with each other.

Is a balloon financing suitable for you or is an installment loan the better alternative? Calculate your finances to find a suitable financing.

Try to keep the runtime as short as possible.

As a result, the value of the car can not drop completely and your connection rate will not be too high accordingly.

Keep your new car in good condition!

Especially if you want to return or sell the car at the end of the term, you should take good care of it. The final rate is calculated in advance on the basis of the estimated mileage and an estimated residual value. If the actual residual value deviates too much, you must pay the difference at the end. If, on the other hand, it is in good condition, you can sell it and finance the due final installment. With a bit of luck and skill, you might even make a profit.

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