Are you planning to buy a car soon? Buying a car can be a really intimidating experience and can worry you about how to get the best deal for financing your car. While there are hundreds of options to finance your car but choosing the best take you precious time and extensive research on the internet. Even after shortlisting a few car finance deals based on your credit score, you will need to take a study on them at a closer level to understand their policies and methodologies of how they work.
Factors to consider while buying a car on finance:
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Always look for an option that fits your pocket and does not unbalance your monthly expenses. Strictly avoid the options that cause stress about paying your EMI.
- Upfront charges:
Ask your car dealer about the full upfront cost that must be paid. It is necessary to come into a hassle free deal.
- Interest Rate to be paid:
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While there are several options available from 15-20% interest to 0% car finance deals. Choose your interest rate wisely by going through all the details mentioned in the car finance document.
- Tenure of the loan:
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Always go for a loan option depending upon your repaying capacity. A car finance for a longer term will have a more rate of interest and will prove to be easy paying option. A car finance deal for a shorter tenure will have a lesser rate of interest.
Types of Car Finance Deals:
- A Purchase Plan:
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In this plan, you have to pay some amount upfront at the time of purchase of the car and balance in the form of monthly installments. These installments must be paid on time to avoid any future problem and the day you pay the last installments, the car is officially owned by you. However, if more than one-third of the cost is left to be paid, the company or bank from which you have taken loan can repossess your vehicle.
- Personal Loan Facility:
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These are way better than the purchase plans and provide the loan at a lesser rate of interest. You even have the option to sell the car if you fail to pay the installments on time. The personal loans take some guarantee or mortgage in exchange for helping you get your dream car. However, make sure you pay the loan in a timely manner as if you are unable to pay the loan price.
- 0% Car Finance:
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This is a car finance option is the best for people who are going to buy a second-hand car. The car can be purchased without any problem and will be a great choice against high-interest rate options available in the market. 0% car finance deals do not allow you to pay more than the price you have bought it outright.
- Contract Option:
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This is a long-term contract where a monthly fee is paid for using a car. But, at the end of the agreement, you have to hand over the car back to the showroom as per the agreement. Always sign the agreement after carefully reading it and look for any extra charges being imposed by the dealer.
Thus, for your car finance, you must do a proper research about various options, buy at a suitable time when there are great deals being offered and always choose the car that has high resale value so that after some years, you can sell it at a good price and earn a hefty return on investment.