Secure financing for a garage or carport: your path to success
03.06.2025
8
Minutes
Katrin Straub
Managing Director at nextsure
A new carport protects your car from the elements, while a solid garage offers security and additional storage space. But costs can quickly reach five-figure sums. We show you how to secure reliable financing for a garage or carport and which options offer the best terms.
The topic in brief and concise terms
For financing of up to 75,000 euros, a modernisation loan is often ideal, as it enables favourable interest rates without a land registry entry.
Costs vary widely: a carport can cost under €1,000, while a solid garage can cost up to €25,000.
Check for government grants, especially if you are installing an EV charging station, to reduce costs.
Estimate costs realistically: garage versus carport
Costs are the first step in the planning process. A simple wooden carport can be built for under 1,000 euros. If you prefer a more durable steel structure, you should budget from 1,500 euros. A solid garage is a much larger investment, with prices starting at 15,000 euros, but it offers more protection and greater possibilities for use. Do not underestimate the ancillary costs for the foundations, planning permission and installation, which often account for 15 percent of the total sum. A double carport can cost up to 10,000 euros, and a double garage correspondingly more. Careful calculation of these costs is the basis for the next step: choosing the right financing option.
Financing options compared: from flexible to earmarked
Several financing options are open to you for funding your project. Each option has specific advantages that come into play depending on the loan amount and your need for flexibility. Careful consideration is crucial for favourable terms. Here are the most common models:
The classic instalment loan offers maximum flexibility, as it is not tied to a specific purpose.
An improvement loan is often more favourable in terms of interest, but it is tied to home-related measures.
Construction financing makes sense for large sums or in combination with other building work.
A building savings contract is ideal if you are planning the build only in a few years’ time.
For amounts under 50,000 euros, an instalment loan or improvement loan is usually the faster and less bureaucratic solution. A loan for unrestricted use suits smaller projects well. Choosing the right financing depends heavily on the total costs and the timeframe.
The modernisation loan: benefit from interest advantages without a land register entry
A renovation loan is specifically intended for value-enhancing improvements to a property. The biggest advantage is that banks often waive an expensive land registry entry for loans of up to EUR 75,000. This not only saves several hundred euros in notary fees, but also significantly speeds up disbursement – often to just four to five working days. Interest rates are usually lower than for an unsecured personal loan, as the bank considers the property to be indirect security. The prerequisite is that you are the owner of the property and can demonstrate that the funds are being used for construction. Such a loan without a land registry entry is ideal for garage projects up to the amount stated. Next, we look at the option for even larger projects.
Property finance: the right choice for major projects
If your new garage is part of a larger renovation or the costs exceed €50,000, a conventional construction loan becomes relevant. In this case, the loan is secured by a land charge in the land register. Although this process takes longer and incurs notary fees, it gives you the lowest interest rates. A low-cost construction loan is often the first choice when the garage is planned together with the house build. The fixed interest period can be set for over ten years, which provides a high degree of planning certainty. 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?
Long-term planning with a building society savings contract
A building society savings contract is a tried-and-tested way to save capital for future housing-related projects. Over several years, you save an agreed amount and secure a future entitlement to a low-interest loan. The loan amount is usually 50 per cent of the building society savings sum. The state also supports building society saving with the housing construction premium, provided your taxable income as a single person does not exceed 35,000 euros. A building society savings contract for renovations is therefore a strategic tool for anyone planning to build a garage or carport in three to five years’ time. In addition to the financing itself, you should also not overlook possible grants.
Expert tip: Check government funding for charging stations
If you are planning to equip your new garage or carport with a charging station for an electric car, you may be able to benefit from government funding. The Kreditanstalt für Wiederaufbau (KfW) has in the past offered grants such as programme 440, which subsidised private charging points with €900 per point. Even though this specific programme has now ended, new regional and national funding pots keep appearing. Our expert tip: Be sure to check the current funding databases of the federal government and the Länder before starting construction. A combination with a photovoltaic system on the garage roof is often a requirement, which is supported by programmes such as KfW 270 with low-interest loans. Such an investment can reduce the total costs by more than ten per cent.
Securing financing for a garage or carport requires a careful analysis of your own needs. For quick, smaller projects up to €10,000, a personal loan is often sufficient. For larger projects up to €75,000, a home improvement loan without an entry in the land register offers the best balance between interest costs and low administrative effort. For very expensive or combined construction projects, there is hardly any way around traditional property financing. Always compare several offers to save at least one to two percentage points on the effective annual interest rate. Well-planned financing is the key to a successful project without financial surprises.
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More useful links
Federal Statistical Office provides information on construction prices and the property price index in Germany.
KfW Banking Group provides information on support for new-build construction 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.
German Banking Industry Committee publishes a press release on construction financing, security and flexibility.
Consumer Advice Centre provides comprehensive information on construction and property financing.
State of Schleswig-Holstein offers information on the building regulations in Schleswig-Holstein.
Federal Ministry of Finance provides information on the Federal Real Estate Agency (BImA).
FAQ
What are the interest rates for garage financing?
Interest rates depend on the type of loan and your creditworthiness. For home improvement loans, the effective annual interest rates are often between four and seven per cent, while they may be slightly higher for unsecured personal loans. Property finance offers the lowest interest rates, but requires a land charge to be registered.
Do I need planning permission to build 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 planning permission, but must still comply with the development plan. Check with the relevant building authority in advance.
Can I take out a loan for a prefabricated garage?
Yes, financing a prefabricated garage works in exactly the same way as financing a solidly built garage. As the costs here are often lower, a personal loan or home improvement loan is generally the most suitable and quickest solution.
How long does it take for a loan to be disbursed for a carport?
For a renovation loan without a land register entry or a personal loan, disbursement usually takes place within a few working days after approval, often just four to five days. A construction finance loan takes several weeks due to the notarisation and the land register entry.
What documents do I need for financing?
As a rule, you will need your last three payslips, your bank statements, a copy of your identity card and the quotation for the garage or carport. For a modernisation loan, an extract from the land register may also be required.
Can I repay the financing early?
Yes, for most instalment loans and home improvement loans, free special repayments or full early repayment are possible. For property finance, this is often only possible against an early repayment fee, unless special repayment rights have been contractually agreed.
