Buying a car is the second most important thing in many households after purchasing a home. There are two main options for buying a car; using cash or taking up a loan. If one has a good credit score, he can get the best deals available, but this does not mean that you can borrow a more considerable amount that you cannot afford. If the savings are not enough to buy the car outright, a larger deposit at the onset will mean less on loan interest. With taking up a loan from any financial institution, it is essential to note that communication is vital significantly if delayed payments. Check out reviewsbird for more information about car leasing.
Getting a personal loan to buy a car from any financial institution can be more comfortable as it is a cheaper alternative to buying with cash because costs can be spread over the years. Usually, the car’s full price is covered, and the best part is one can get a competitive fixed interest rate while window shopping. The downside of this option is that monthly costs might be higher and can affect other borrowings. Depending on its policies, payment is usually paid immediately or paid into one’s bank account.
Hire purchase is also an option of buying a car on finance where the loan is secured against the vehicle itself. Usually, a low deposit of 10% is made, and a fixed monthly payment is made over a given period (12-60months), making it quick and easy to arrange. Car ownership title will wait until the last payment has been made. Hire purchase has competitive fixed interest rates, and the agreements are set by the car dealers, making them convenient to arrange. Something to note is that short term agreements tend to be more expensive.
Personal contract hire/leasing is another way of financing a car. A fixed amount is paid monthly to use a vehicle with servicing and maintenance included provided no excessive use of the dealer’s mileage stipulated. And at the end of the agreement, the car is given back. The car user never worries about the depreciation value, and one can have the flexibility of switching providers and payment terms. Monthly payments are higher, and if one exceeds the mileage, there is a cost for that. Deposit is usually three months’ rental.
Things to look out for when buying a car; make sure you can afford the monthly payment, beware of the early repayment or any other charges. Compare interest rates offered by different companies. Compare the total cost of borrowing versus a one-off purchase. Ensure you know what will happen if you fall behind with the monthly payments. Insurance is essential therefore ensure you take a cover designed to pay out the car in case of any accidents such as GAP cover.
