RELEVANCE OF CAR FINANCING IN GERMANY FOR PRIVATE CUSTOMERS
RELEVANCE OF CAR FINANCING IN GERMANY FOR PRIVATE CUSTOMERS

Summary/Abstract: Automotive car finance is an option in car sales, enabling automotive customers to finance their purchase, giving them exclusive access to a vehicle until repayment of the credit or when they return the car. Customers can either purchase a car via an (electronic) cash transfer or via a means of car financing. Car financing products are classified into car loans, with different loan variations, and leasing, where customers return the vehicle at the end of the lease. The economics of the financing products are similar and based on the contract duration, interest rate, and expected residual value, which is derived from the driven mileage and time. This paper discusses the dynamics of car financing, which has been recently influenced with an increase of refinancing costs of Euribor, the specific products offered in the German market, which are KM-leasing and a multi-option credit and its relevance for the German private new car sales, as well as related stakeholders like OEMs, car retailers and banks offering the products.

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