Living debt-free is a priority for many Germans, but the cultural and emotional value of cars often leads consumers to consider financing their dream car. 63% of Germans consider car ownership an important part of German culture, and 33% believe the brand of car someone owns says a lot about them, a sentiment that is even stronger among younger generations. Highlighting how car finance helps consumers achieve their dream car and positioning it as an investment in their future can boost interest. Tailor emotional messaging to the different meanings consumers attach to cars.
Although refinance interest rates have dropped, borrowing costs remain high, prompting caution among consumers. However, as lower refinancing rates feed through to borrowing costs, more consumers may explore car financing options.
Lenders can capitalise on the growth of the EV market by offering financing solutions that address key barriers to EV adoption. These could include options like wallbox financing, charging credits or discounted energy tariffs. Moreover, lenders should focus on engaging buyers earlier in the purchase journey to compete with dealerships. This can be done by making car finance search engaging, leveraging PCWs and enhancing customer engagement.
This report looks at the following areas:
- Method of financing and type of car financing used
- Channels used when researching car finance, such as dealerships, comparison sites and banks
- Important factors when choosing a car finance product, including low monthly payments, low interest rates and low deposit
- Future purchase intentions, including consumers planning to secure car finance within the next three years
Electric car buyers are looking for innovative finance solutions. Encourage the exploration of financing options early while connecting with the emotional side of car ownership.
Venkatesh Modi, Research Analyst, Germany
Market Definitions
The Report examines the car finance market in Germany.
Car finance options include hire purchase (Autokredit), personal contract purchase (Ballonfinanzierung), personal contract hire (3-Wege-Finanzierung), and other products. Leasing and personal loans are excluded.
The categories are defined as follows:
Hire purchase: a loan secured against the car, typically offered by car dealers and manufacturers
Personal contract purchase: a type of lease agreement that comes with the option to buy the car at a pre-agreed price or refinance when the contract ends
Personal contract hire: a lease agreement involving an initial down payment, then monthly rental payments until the end of the contract period when you can then either pay off, refinance or hand the car back.
The market size data covers the value of new credit and leasing business reported by member institutions of the Bankenfachverband.
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EXECUTIVE SUMMARY
- What you need to know
- Opportunities
- Outlook
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OPPORTUNITIES
- Capitalise on the growth of electric cars
- Electric car financing shows growth potential
- Offer EV-specific finance options
- Start the car finance conversation early in the purchase journey
- Dealerships dominate the car finance purchase process
- Ways to position car finance early in the car-purchasing process
- Focus on the emotions of owning the perfect car
- The cultural and emotional value of cars conflicts with Germans’ aversion to debt
- Showcase how car finance enables the perfect car
- Santander car finance ad taps into the emotional side of buying a car
- Cater to different perspectives on the ideal car
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CONSUMER
- Method of financing
- Two out of 10 drivers rely on car financing
- The cultural and emotional value of cars clashes with Germans’ debt-averse mindset
- Hire purchase is the most popular form of financing
- Graph 1: type of car finance used, 2025
- As consumers age they are more likely to buy a car outright
- Graph 2: method of acquiring current car, by generation, 2025
- New car buyers are more likely to finance a car
- Graph 3: method of acquiring current car, by type of car, 2025
- Partner with third party selling websites to reach used car buyers
- Showcase how car financing helps families get their ideal vehicle
- Channel of research and purchase
- Most of those with car finance rely on dealerships for research
- Graph 4: channel of car finance research, 2025
- Position car finance early in the purchase process
- Make the hunt for car finance deals more engaging
- Many under-45s research through channels other than dealerships
- Graph 5: channel of car finance research, by age, 2025
- Leverage social media to expand reach
- PCWs: leverage popularity in car insurance to cross-sell car finance
- Act as a reliable partner during financial hardships
- Dealerships are also popular for taking out car finance
- Graph 6: purchase channel for car finance, 2025
- Dealerships face challenges from purchasing habits of under-45s
- Graph 7: channel of car finance purchase, by age, 2025
- Young consumers seek the convenience of taking out finance online
- Important factors when choosing a car finance product
- Choice of car and low monthly payments are key when choosing a finance product
- Graph 8: important factors when choosing a finance product, 2025
- Maintain transparency when marketing car finance products
- Link car finance to dream car
- Highlight the ease of approval
- Future purchase intentions
- One in 10 Germans expect to purchase a car on finance in the next three years
- Consumers may be overestimating their ability to purchase a car outright
- Those aged below 45 are a key target for car finance
- Electric car financing shows growth potential
- Improve customer retention by increasing touchpoints
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MARKET
- Market drivers
- Consumers remain cautious
- Graph 9: financial consumer confidence, 2022-25
- Despite lower refinancing rates, borrowing costs remain high
- Graph 10: effective annual interest rate including costs for consumer loans to households (new business), 2018-25
- Graph 11: ECB main refinancing operations interest rate, 2000-25
- Demand for car financing may increase
- Market size
- Car finance shows steady growth since 2021
- Graph 12: value of new credit and leasing business*, 2019-24
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APPENDIX
- Report scope and definitions
- Market definition
- Generations
- Abbreviations
- Methodology – consumer research
- Consumer research methodology
- A note on language
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