A car is seen by many families as an essential item which just has to be owned, and maintained. Even the most financially scrupulous family may consider getting a car on finance, in light of how much money actually having a car can save many families in terms of travel expenses. A car also improves a person’s quality of life and offers independence to people, so it is not surprising that car ownership is something we will consider getting finance for. Read on to find out the pros and cons of getting a car on finance and for help with making the right decision for you about how to go about buying a car.
Loans?
These days it is much harder to get a personal or business loan, but if you are lucky enough to have a financial profile that allows you to seek finance of this kind then it could be the more sensible course for you to take. Things to watch out for when getting a loan though are how the loan is secured (eg unsecured loans or one secured against your home), and whether the loan funds will be available right away, if you have need of the car as a part of a business plan (i.e. driving to client meetings or making deliveries for example) then this could fall under a business expense and be covered by a business loan.
Sometimes the application process for a loan is cumbersome and may result in disappointment after six weeks or more of waiting with baited breath. When applying for a loan for a car you should always consider the worst case scenario- what will happen if your circumstances change and you can’t pay the loan back?
Things to consider here are whether the loan is secured against your home and the reputation of the company concerned. Some finance companies have terrible reputations for how they treat customers in debt to them, so this should always be something you consider before you commit to a loan to finance a car.
Hire purchase?
Hire purchase to fund getting a car tends to be more expensive in the short-term for consumers. It also usually requires a deposit of around 10%, and consumers must remember that you don’t actually own the car until you have made the final payment under the hire purchase scheme. The pros are that these type of arrangements are quick and easy to arrange and will usually offer a fixed term plan which is easier to budget for.
Leasing?
If you can’t afford to buy a car, why not lease one? This means you are more in control of the car you drive and you are paying for it in a ‘pay as you go’ way. Servicing and maintenance are ordinarily including in the leasing plan so this is useful especially if you don’t know that much about car, for example if this is your first car. The downside to this way of financing a car though is that you will never own your own car and you may be subject to penalties, for example if you exceed mileage limits or if you miss a payment.
We are planning to buy our very first car, and we were thinking to choose a loan. But currently we are not yet ready, we need to save more for the car deposit.
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When we purchase a car we pay nothing but cash. I know it seems like a lot of money upfront especially with interest rates so low but we have a firm stance on debt.
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This is a great post to outline all of the options to buy a car! The next car we buy, we’re going to look into buying it through our business – so we’re excited to explore that.
We recently just wrapped up a car purchase – we bought used with very low mileage because it was a lease surrender. We also paid $5K of the down payment on our credit card to hit our signup bonus (that’s another $700-$1,000 in airfare that we’re saving!). We got a very low interest rate on our loan – if we pay it off in 1 year (which is the masterplan!) we would pay less than $100 in interest on the loan. With our credit card bonus, we are basically erasing that interest charge altogether.
Whatever you’re doing, as long as you’re maximizing your dollars – that’s good in my book!
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All the ways of buying a car are good but I liked the first one in which we take loan from banking organisation and return it in the form of monthly installments. In this case, we will give down payment to the car dealer and after that we can take our car to our home and give intallment monthly for that car.But atlast it will become your own car.