Use the development of used car prices for affordable car financing
30 Apr 2025
3
Minutes
Katrin Straub
CEO at nextsure
The prices for used cars have stabilised following the record years, while a turning point is emerging in the loan interest rates. This market situation offers savvy buyers a window of opportunity to secure particularly favourable car financing and save hundreds of euros.
The topic in brief and concise terms
Used car prices have stabilized at a high level in 2024/2025, while falling key interest rates are making car loans more affordable.
The choice of financing method (installment loan, three-way financing) and the right timing can reduce total costs by hundreds of euros.
The residual value forecast is crucial: Used electric cars lose significantly more value, at 48.5 percent, than petrol cars, at 36 percent, over three years.
Market Analysis 2025: Stable Prices Meet Falling Interest Rates
The used car prices started steadily at the beginning of 2025, averaging 27,059 euros, which is only 1.2 percent below the previous year's month. This stability after the turbulent previous years offers a solid planning foundation for buyers. Meanwhile, the European Central Bank (ECB) has lowered the key interest rate to 2.0 percent by June 2025, making refinancing cheaper for banks. This combination of predictable vehicle prices and potentially falling credit interest rates creates an optimal environment. Buyers who act now can secure attractive conditions before demand—and possibly prices—pick up again. Financing for young used cars becomes particularly interesting as a result. The right strategy now depends on cleverly combining these two market factors.
Optimising timing: Determining the best time to buy for maximum savings
The right time to buy a car can significantly impact your overall costs. Historically, the summer months often feature promotional offers because demand tends to decrease seasonally. Here's a calculation example: A mere three percent discount on a used car valued at 20,000 euros results in a direct saving of 600 euros. Even more important is the interest rate trend on four-year financing. If the effective annual interest rate drops from six percent to five percent, you save over 400 euros in interest costs on a loan amount of 20,000 euros over the term. Those who want to quickly calculate financing should carefully review current interest rate offers. The key is to align a favorable purchase price with the low point of the interest rate development.
Using financing options strategically: Three ways to achieve lower monthly payments
Choosing the right form of financing is crucial for your monthly burden and overall costs. According to a study by the Banking Association, 55 per cent of car financing is attributed to traditional instalment loans. Here is an overview of the three most common models:
Traditional Instalment Loan: Offers maximum planning security with fixed rates and terms. Ideal for buyers who want to own the vehicle at the end of the term.
Three-Way Financing: Allows for low monthly rates due to a high final payment. At the end of the term, the car can be returned, purchased, or refinanced.
Balloon Financing: Similar to three-way financing, but the final payment must be fully settled at the end, which often requires follow-up financing.
Our Expert Tip: A flexible three-way financing is suitable if you're unsure whether you want to keep the car long-term. However, pay close attention to the terms for the final payment to avoid cost traps.
Maximize negotiation leverage: How price analysis strengthens your position
In-depth knowledge of the current market situation is your strongest leverage during price negotiations. Although used car prices are stable, there are regional differences of up to 2,000 euros for the same model. Use online valuation portals to determine the exact value of your desired vehicle. A well-informed buyer who pays in cash can often negotiate an additional discount of three to five percent. This is possible by taking out the car loan directly from a bank instead of through the dealer. Another option is to trade in your old car, which can further improve your negotiating position. This ensures that you benefit not only from the general market trends but also from individual negotiation skills.
Residual Value Forecast: Securing the Value Development of Electric and Combustion Vehicles
The residual value development is a crucial factor for the total cost of a vehicle. There are significant uncertainties, especially with electric cars. Three-year-old petrol cars still achieve an average of 64 per cent of their list price, while battery electric vehicles (BEV) come in at only 51.5 per cent. This depreciation of over 12 percentage points compared to petrol cars represents a considerable financial risk. Premium electric cars like the Porsche Taycan lost 38 per cent of their value over three years, which equates to around 50,000 euros. Our expert tip: Consider the Total Cost of Ownership (TCO), which includes all costs over the holding period. The lower purchase price of an electric car can quickly be nullified by a higher depreciation. Those who focus on value stability might find an interesting alternative in a loan for a classic car. A careful choice of model minimises the residual value risk and secures your investment in the long term.
Creditworthiness and Contract Details: Laying the Foundation for Top Conditions
Your personal creditworthiness is the key to the best interest rates. A good Schufa score signals to the bank a low default risk, which is rewarded with lower interest rates. You can improve your chances by requesting a free data copy from Schufa before applying for a loan and having any errors corrected. Consolidating several small loans into one can also improve your score. Even an improvement in the effective annual interest rate by one percentage point can mean savings of several hundred euros over the term. Therefore, it is advisable to assess your own financial situation before obtaining offers. Even a car loan with medium creditworthiness is possible, but preparation is crucial for fair conditions. This is how you lay the foundation for a truly affordable car financing.
Your next step: Personalised analysis for your optimal car financing
The current market situation offers a rare opportunity to set the course for advantageous vehicle financing. Stable used car prices combined with a tendency for declining loan rates create an ideal environment for car buyers. As shown, careful planning, the right timing, and an appropriate financing strategy lead to significant savings. Your creditworthiness and negotiation skills are the crucial tools here. Use this knowledge to achieve your personal goals, whether it's the lowest possible monthly rate or the quickest repayment.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific optimisation suggestions.
More useful links
Statista provides statistics on average used car prices in various German cities.
Statista provides data on average prices for used and new vehicles in Germany.
DAT offers an article about purchase prices when buying used cars.
DAT provides the DAT report on this page.
DAT Group offers a summary report of the DAT Report 2025 in PDF format.
Statistisches Bundesamt provides an interactive graphic on prices in the automotive and transport sector.
Statista offers the consumer price index for used passenger cars in Germany.
Deutsche Bundesbank publishes statistics on interest rates and yields for consumer loans relevant to car financing.
FAQ
What is the difference between a balloon financing and a three-way financing?
Both types of financing are characterised by low monthly instalments and a high final payment. However, with three-way financing, you have three options at the end of the term: returning the car, paying the final instalment, or taking out follow-up financing. With balloon financing, the final payment usually has to be paid in full.
How can I improve my credit rating for a car loan?
Check your Schufa entries for accuracy. Additionally, if possible, consolidate several small loans into one to reduce the number of creditors. A higher down payment also improves your negotiating position and the loan terms.
Is it more sensible to take out the loan from the dealer or a bank?
By taking out a loan from an independent bank, you can present yourself as a cash buyer to the dealer. This often gives you better negotiating leverage and can lead to discounts of three to five percent. However, always compare the total costs of both options.
What loan term is recommended for a car loan?
A shorter term, for example up to five years, results in higher monthly payments but lower overall costs, as you pay interest over a shorter period. Longer terms reduce the monthly burden but increase the total amount of interest paid.
Do electric cars really depreciate that much?
Yes, recent analyses confirm this. On average, a three-year-old electric car retains only 51.5% of its original value, whereas a petrol car retains 64%. This is due to rapid technological advancements and uncertainty about battery lifespan.
What does an interest rate independent of creditworthiness mean?
A credit rating-independent interest rate means that all customers with sufficient creditworthiness receive the same interest rate, regardless of their individual Schufa score. This creates transparency and makes it easier to compare loan offers.
