Secure a car loan at fair interest rates despite average creditworthiness
05.06.2025
7
Minutes
Katrin Straub
Managing Director at nextsure
Do you dream of a new car, but your credit rating is only average? Many people fear high interest rates or rejection, but this is often unfounded. Find out how you can improve your chances of getting a car loan at fair interest rates despite an average credit rating, and which steps are crucial.
The topic in brief and concise terms
An average credit rating (SCHUFA score 90–97%) is not an obstacle to a fair car loan; good preparation is crucial.
Improve your terms by making a deposit, adding a second borrower or choosing a shorter term.
Use SCHUFA-neutral credit enquiries to compare loans and critically assess whether expensive loan repayment insurance is necessary.
Understanding your creditworthiness as the key to fair loan interest rates
A medium credit rating is not a reason for exclusion from a car loan. A SCHUFA score between 90 and 97 per cent signals a manageable risk for the bank. Before you submit an application, you should know your exact creditworthiness. You can request a free data copy under Article 15 of the GDPR from SCHUFA once a year. Many consumers do not know their exact score value, for example 94 per cent. A realistic household budget and knowledge of your own score are the basis for successful negotiations. With this information, you can search specifically for offers that suit your financial situation.
Actively improve credit terms through targeted measures
You have several levers to influence the loan terms in your favour. A higher deposit of, for example, twenty per cent reduces the loan amount and the risk for the bank. This often leads to a lower interest rate. Another option is to take out the loan with a second borrower with strong creditworthiness. The bank then assesses the joint creditworthiness, which can increase the chance of approval by up to fifty per cent. You should also consider shortening the term; shorter terms do mean higher monthly instalments, but the total interest costs fall significantly. Financing without a deposit is possible, but usually results in higher interest rates.
Here are four effective ways to improve your negotiating position:
Make a deposit: A deposit of just ten thousand euros on a purchase price of 40,000 euros can reduce the interest rate by up to one percentage point.
Add a second borrower: A partner with a SCHUFA score above 97.5 per cent significantly increases the likelihood of approval.
Optimise the term: A term of 48 rather than 72 months can save several hundred euros in interest.
State the purpose: A purpose-bound car loan for a new car is often cheaper than a flexible-purpose instalment loan, as the vehicle serves as security.
By combining these measures, you show the bank that you are a well-prepared borrower with a low risk profile.
Strategic loan search: comparing offers properly
Do not rely solely on the dealership’s offer. Dealer financing often includes hidden costs in the purchase price. An independent comparison of at least three to five banks is crucial. It is important to submit a „conditions enquiry“ rather than a „credit enquiry“ to the banks. Conditions enquiries are SCHUFA-neutral and prevent your score from worsening due to too many enquiries. Many online comparison portals use this type of enquiry by default. This allows you to compare the interest rates for a car loan without SCHUFA-deterioration risk-free. Specialised loan brokers can also be a good point of contact, as they often work with banks that have more flexible assessment criteria.
Expert tips: legal pitfalls and opportunities for savings
Banks are legally obliged to assess creditworthiness, as stipulated by Section 505a of the German Civil Code (BGB). However, you have the right to check the data stored about you at SCHUFA. You can have incorrect or outdated entries deleted. An unpaid mobile phone contract of over €150 can already have a negative impact on your score. The deletion period for settled loans is usually three years. Our expert tip: Critically assess the need for a residual debt insurance. This often makes the loan several thousand euros more expensive and is not compulsory. A term life or disability insurance policy can be a cheaper and better alternative.
Flexible financing alternatives to the conventional instalment loan
Besides the classic personal loan, there are flexible financing models. The three-way financing offers low monthly instalments and, at the end, three options: purchase, return, or follow-on financing of the final instalment. Leasing is another alternative, where you only pay for use, but the vehicle remains the property of the leasing company. This can bring self-employed people tax advantages of up to thirty per cent. For new drivers, a special car loan for new drivers with a parental guarantee may be a solution. Weigh the pros and cons of each option carefully to find the right solution for your personal circumstances.
Long-term optimisation through refinancing an expensive loan
If you have already taken out a car loan with high interest rates, refinancing may be worthwhile. If your SCHUFA score has improved since the contract was signed, you can often obtain a new loan with interest rates two to three percentage points lower. Please note the prepayment penalty for early settlement of the existing loan. For consumer loans, this is legally capped at a maximum of one per cent of the outstanding balance. If the remaining term is less than twelve months, the limit falls to 0.5 per cent. A careful calculation of whether the interest savings exceed the compensation is the key to success here. With an online calculator, you can quickly determine your savings potential.
Request your individual risk analysis now: Have your insurance situation checked free of charge and receive specific recommendations for optimisation.
More useful links
The Consumer Advice Centre explains how to identify dubious loan offers and what common pitfalls there are.
The Federal Statistical Office provides datasets and statistics on loans and online transactions.
The Deutsche Bundesbank provides statistics on interest rates and yields for consumer loans to private households.
The Consumer Advice Centre gives tips on how to save money on loans and borrowing.
The Consumer Advice Centre offers help in financial emergencies and payment difficulties.
The Consumer Advice Centre explains the background, advantages and disadvantages, as well as possible pitfalls of zero-interest financing.
The Consumer Advice Centre provides information on inadmissible bank charges and fees on loans.
FAQ
What exactly does average creditworthiness mean?
Moderate creditworthiness means that you are considered creditworthy, but for the bank there is a slightly increased risk of default compared with top creditworthiness. This is often associated with a SCHUFA base score between 90 and 97 per cent. In this range, lending is likely, but interest rates may be higher than for applicants with a score above 97.5 per cent.
How many credit enquiries should I make at most?
The number of credit enquiries is less important than the type of enquiry. You can submit as many SCHUFA-neutral “terms enquiries” as you like without affecting your score. However, avoid binding “credit enquiries”, as several such enquiries within a short period may be interpreted by SCHUFA as a sign of financial difficulties and can lower your score.
What documents do I need for the loan application?
Typically, you will need your last two to three payslips, your bank statements for the last three months, a copy of your identity card and, where applicable, a copy of your employment contract. For a car loan taken out for a specific purpose, the bank will later also require the vehicle registration certificate Part II (vehicle logbook) as collateral.
Does a guarantor help with average creditworthiness?
Yes, a guarantor with very good creditworthiness can significantly improve the chances of obtaining a loan and lead to better interest rates. The bank has additional security through the guarantor. However, a second borrower is even more effective, as they are jointly and severally liable from the outset.
Can I pay off a car loan early?
Yes, you can repay a car loan early at any time, in full or in part. The bank may charge an early repayment fee for this, which is capped by law at a maximum of one per cent of the outstanding balance. If the remaining term is less than one year, it is only 0.5 per cent.
What is the difference between the nominal interest rate and the effective interest rate?
The nominal interest rate (or nominal rate) is the pure interest rate for the borrowed money. The annual percentage rate includes, in addition to the nominal interest rate, all other costs and fees of the loan, such as arrangement fees. When comparing loan offers, you should therefore always use the annual percentage rate.
