Last year, almost half of new car registrations in Finland were rechargeable. Though, despite electric vehicles' prevalence, the price tag is still yet to come down, and this is leading to a dependence on car loans.

When getting a new car in Finland, there are three main options: buying with cash, buying on finance, and leasing.

Should You Buy or Lease? Key Considerations Before Financing a Car

Deciding on buying or leasing involves weighing up a few things. Leasing is often preferred by those who want minimal upfront costs and, often, lower ongoing monthly repayments because you’re not paying off the entirety of the car’s value (plus interest), like a car loan. Leasing is also favored by those wanting less risk of maintenance, as the car’s maintenance is often covered by the leasing company. When the lease is up, you can simply upgrade to a new car.

Buying typically costs more, because at the end of the purchase or loan, you will own the vehicle outright. 25.5% VAT is required on the importing and acquisition of cars in Finland, though this may be deducted when purchasing for business purposes. You will have more responsibility for its maintenance and are exposed to its depreciation, which is around a 10% fall in value per year.

However, owning a car means having much more freedom. Leasing often comes with mileage restrictions, while owning a car allows you to make modifications and use it for a broader range of purposes.

Different Types of Car Loans Available in Finland

There are a few different options when financing a car purchase. Traditional bank loans are a popular option, with the likes of Nordea and Danske Bank offering both secured and unsecured loans. OP Tailored Consumer Credit is a good option for those needing less than 30,000 euros in financing. Though, with alternative lending services, borrowers can find loans of up to 70,000 euros immediately and with no collateral.

This makes a change from traditional hire purchase agreements, which many dealerships offer. These typically use the car itself as collateral, leading to a lower APR because the car will be handed over upon failed repayments. Perhaps more concerning is that in the fine print of many of these loans, the lender sees the car as theirs until the loan is paid off. This can defeat the purpose of owning a car (the advantages of freedom, mileage and modifications) as the lender may have rules surrounding them.

Secured vs. Unsecured Car Loans: Which One Is Right for You?

Secured car loans are where a personal asset—typically the car itself—is put forward as collateral. The lender feels more comfortable this way, as they can repossess the car should the borrower fail to repay. In fact, they can even repossess the vehicle from your private property should they have a court order. These are typically the lowest loan rates that are achievable when it comes to car loans.

In contrast, when choosing an unsecured loan, like the ones seen on online comparison platforms, missing payments can result in a worsening credit score and potential legal action, but ultimately your car remains safe. The benefit of these loans is that they’re very quick and can be used on any used car purchase that you like.

Of course, a secured loan with a low APR is ideal in many straightforward scenarios. However, the previously mentioned unsecured loan offers more freedom over what car you decide to buy, because the lender doesn’t have to approve its value. For example, you may want to purchase a van and convert it into a camper. In this scenario, you are likely to be more confident on its future value than a traditional lender. Therefore, some unsecured online loans may offer the freedom to make this purchase and commit to the conversion.

How Interest Rates and Loan Terms Affect Your Monthly Payments

The interest rate is the price you pay on borrowing money. In 2025, European interest rates are heightened as a response to global inflation, and so loans are slightly more expensive now across the board. However, there are still choices to make surrounding the loan term.

The loan term is how long you have to repay the loan. Together, the loan term and interest determine the amount you will pay each month given your loan amount.

A shorter loan term means that you will pay more per month, as you will be cleared of the debt sooner. In terms of overall interest that you pay, it is less because interest is applied over time. However, opting for a 48 or 60-month loan term will be easier on the wallet in the short term, with smaller monthly outgoings.

The Benefits of Comparing Car Loan Offers Before Borrowing

Shopping around for car loans can save hundreds, if not thousands of euros. It’s not only the interest rate and loan size, but the processing and underwriting fees, late payment fees, and whether you can make early repayments.

For those with a less-than-stellar credit score, comparing is even more important because seeing all of your limited options is important. Car loan comparison tools present many lender options for both individuals and companies, comparing their rates, fees and policies.

Finding a lender that allows early repayments is very important with a sizeable car loan. Early repayments can reduce the overall cost of the loan, as it exposes the borrower to interest for a shorter period of time. However, not all loan terms facilitate this, and it’s particularly worthy of investigating when looking at hire purchase loans.

Final Word

Whether opting for a secured, unsecured loan, or a lease, it’s important to research carefully in this high-interest environment. Comparing options not only finds cheaper rates, but it nudges borrowers to think more deeply about the fine print.