Securing financing for a garage or carport: Your path to success
3 Jun 2025
8
Minutes
Katrin Straub
CEO at nextsure
A new carport protects your car from the weather, while a solid garage offers security and additional storage space. However, the costs can quickly reach five-figure amounts. We show you how to secure solid financing for a garage or a carport and which options offer the best conditions.
The topic in brief and concise terms
For financing up to 75,000 euros, a modernization loan is often ideal, as it offers favourable interest rates without the need for a land register entry.
The costs vary greatly: A carport can cost under €1,000, while a solid garage can cost up to €25,000.
Check government subsidies, especially if you are installing a charging station for electric vehicles, to reduce costs.
Realistically Calculate Costs: Garage versus Carport
The costs are the first step in planning. A simple wooden carport can be built for under 1,000 euros. If you prefer a more durable steel construction, you should expect costs starting from 1,500 euros. A solid garage is a significantly larger investment at prices starting from 15,000 euros, but it offers more protection and usage options. Do not underestimate the additional costs for the foundation, building permit, and assembly, which often account for 15 percent of the total amount. A double carport can cost up to 10,000 euros, with a double garage costing correspondingly more. The precise calculation of these expenses is the basis for the next step: choosing the appropriate form of financing.
Financing Options Compared: From Flexible to Purpose-Bound
There are several ways open to you for financing your project. Each option has specific benefits that come into play depending on the loan amount and flexibility needed. Careful consideration is crucial for favourable terms. Here are the most common models:
The classic installment loan offers maximum flexibility because it is not tied to a specific purpose.
A modernization loan is often cheaper in terms of interest but is bound to residential measures.
A construction financing is worthwhile for large amounts or in combination with other building measures.
A building savings contract is ideal if you are planning the construction in a few years.
For amounts under 50,000 euros, an installment or modernization loan is usually the faster and less bureaucratic solution. A loan with no fixed purpose fits well with smaller projects. The choice of the right financing depends greatly on the total costs and time frame.
The modernization loan: Take advantage of interest rate benefits without a land register entry
A modernisation loan is specifically intended for value-enhancing measures on a property. The biggest advantage is that banks often waive a costly land registry entry for loans up to 75,000 euros. This not only saves notary fees of several hundred euros but also significantly speeds up the payout – often to just four to five working days. The interest rates are generally lower than with a regular personal loan, as the bank considers the property as indirect security. The prerequisite is that you are the property owner and can prove the funds are used for construction. Such a loan without a land registry entry is ideal for garage projects up to the mentioned amount. Next, we'll consider the option for even larger projects.
The construction financing: The right choice for large projects
If your new garage is part of a larger renovation or if the costs exceed 50,000 euros, a traditional construction financing will be relevant. In this case, the loan is secured by a land charge in the land register. This process does take longer and incurs notary costs, but it ensures the lowest interest rates for you. A favourable construction financing is often the first choice when the garage is planned together with the house construction. The interest rate can be fixed here for ten or more years, providing a high degree of planning security. This option is less flexible, but for high six-figure sums for an overall project, it is the most economical solution. But what if you want to plan long-term and save?
Plan long-term with the building savings contract
A home savings contract is a proven method to save capital for future residential projects. Over several years, you save an agreed amount and secure the right to a low-interest loan for the future. The amount of the loan is generally 50 per cent of the savings sum. The state also supports home savings with the housing premium, provided your taxable income does not exceed 35,000 euros as a single person. A home savings contract for renovations is thus a strategic tool for anyone looking to build a garage or a carport in three to five years. Besides pure financing, you should also not overlook possible subsidies.
Expert Tip: Check Government Subsidies for Charging Stations
If you are planning to equip your new garage or carport with a charging station for an electric car, you can benefit from government subsidies. The Kreditanstalt für Wiederaufbau (KfW) has previously offered grants such as the 440 programme, which subsidised private charging points with 900 euros per point. Although this particular programme has expired, there are always new regional and national funding opportunities. Our expert tip: Before starting construction, be sure to check the current funding databases from the federal and state governments. Often, the combination with a photovoltaic system on the garage roof is a prerequisite, which is supported by programmes such as KfW 270 with low-interest loans. Such an investment can reduce total costs by more than ten percent.
Conclusion: The right financing is individual
Securing financing for a garage or a carport requires careful analysis of your own needs. For quick and smaller projects up to 10,000 euros, a personal loan is often sufficient. For larger projects up to 75,000 euros, a renovation loan without a land register entry offers the best balance between interest costs and minimal hassle. For very expensive or combined construction projects, there's hardly any alternative to the traditional mortgage financing. Always compare multiple offers to save at least one to two percentage points on the effective annual interest rate. Thoughtful financing is the key to a successful project without financial surprises.
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More useful links
Statistisches Bundesamt provides information on construction prices and the property price index in Germany.
KfW Bankengruppe offers information on new construction funding for private individuals in Germany.
Deutsche Bundesbank presents its indicator system for the residential property market.
Statista provides statistics on the development of construction interest rates in Germany.
Deutsche Kreditwirtschaft publishes a press release on the topics of construction financing, security, and flexibility.
Verbraucherzentrale offers comprehensive information on building and property financing.
Land Schleswig-Holstein provides information on the building regulations in Schleswig-Holstein.
Bundesfinanzministerium provides information on the Institute for Federal Real Estate (BImA).
FAQ
What are the interest rates for garage financing?
The interest rates depend on the type of loan and your creditworthiness. For renovation loans, the effective annual interest rates often range between four and seven percent, while they may be slightly higher for unsecured personal loans. Mortgages offer the lowest interest rates but require a land charge registration.
Do I need a building permit to construct a garage?
That depends on the federal state and the size of the construction project. In many federal states, garages up to a certain floor area (often 30 to 50 square metres) do not require a permit, but must still comply with the development plan. Please check with the local building authority in advance.
Can I take out a loan for a prefab garage?
Yes, financing a prefab garage works just like for a solidly built garage. As the costs are often lower here, an installment or modernization loan is usually the suitable and fastest solution.
How long does it take to pay out a loan for a carport?
With a modernisation loan without a land register entry or an instalment loan, the payout usually takes place within a few working days after approval, often only four to five days. A construction financing takes several weeks due to the notarial certification and the land register entry.
What documents do I need for the financing?
As a rule, you'll need the last three payslips, your bank statements, a copy of your ID card, and the cost estimate for the garage or carport. For a renovation loan, an extract from the land register may also be required.
Can I repay the financing early?
Yes, with most installment and modernization loans, free special repayments or a complete early repayment are possible. With mortgages, this is often only possible with an early repayment penalty, unless special repayment rights have been contractually agreed upon.
