- January 12, 2012
10 Easy Ways to Finance Your Car
Whether you are going to buy a car for the first time or upgrading your car, car financing remains an important question at the back of your mind especially when you are supporting a family. In these recent times of recession and inflation, one wants to get the best car with the best deal, there are no tricks and loop holes and you can enjoy driving.
The way you finance your car will affect your other investments in future. So, be careful. Whether you are going to buy a classic car, sports car, wagon, pick-up or a sedan, here are or 10 easy ways that will help you in choosing the easiest way to fund your car.
1. Pay the cash
If you are born with golden spoon then you might be lucky enough and would like to pay the direct cash in lump sum amount and buy a new car. Money wouldn’t be a matter for you.
2. Opt for the most suitable Loan
Don’t get disappointed if you haven’t got the money or have less cash in your bank. Opt for the loan. Different types of loans are available. Choose the loan that is most suitable for you.
i. Personal Loan
You can either select a bank that is offering a good deal on personal loan. Most banks allow you to pay the loan in 2 to 6 years. The advantage is lower interest rate and disadvantage is the fixed price of vehicle. However, if a friend or private party is giving you loan, do check the term and conditions before taking it.
ii. Home Equity Loan
If you have your personal house, then Home Equity Loan is the best choice as it offers the lowest possible interest rates and you can borrow the amount for your car against equity of your house. The interest can be deducted from the taxes also.
3. Choose the best purchase deal
Varieties of purchase deals are available with the car dealers. Go for the best one.
i. Personal Contract Purchase
It is the most feasible deal that let you save your money and you have to pay the most reasonable price. You have to pay 10 -20% in the start and then the rest amount is payable in installments. Guaranteed Future Value (GFV) assures that your vehicle will be worthy. You have three choices usually at the end. You can give the vehicle back, buy it at the GFV rate and you can also exchange the vehicle.
ii. Hire Purchase
In hire purchase a financing company pays for your vehicle to the dealer and then you have to deal with the company. You can pay the money in 72 months and not more than that. This deal is beneficial as no Value Added Tax (VAT) is charged.
4. Take Short loans
If you have chosen to take a loan, take it for shorter period of time. Usually the best one to choose is for 36 months or two years, as the car will be yours only if you pay the full loan. Extended loans make the vehicle affordable but when you become the real owner, the car has almost completed its best years and starts to wear and tear.
5. Credit Card
Credit card is a good option if you are getting short of very less amount of money. You can add the money to your cash via credit card deals. Most credit cards offer best deals for car financing.
6. Time Your Purchase
Shop the car at the right time. Buy it at the start of the week or at the end of the month as dealer and car companies are offering the best deals. Also sales are put on every purchase on special events like Christmas, New Year and Thanksgiving. So look out for the sale.
7. Choose Company Certified Pre-owned cars
If you can’t afford a new car, then buy a used car. The company Certified Pre-owned car will be the best option as they offer the most reasonable rates and deals.
8. Pay Extra’s as advance
Pay taxes, fees and additional costs in advance and don’t include them in the loans and deals as it will cut down your finances.
You can also trade- in for the old car. Sell the old car and add this money to the amount you are using to buy a new car.
10. Lease only as a last option
Leasing is recommended as a last option. It is more like taking a loan as you have to pay monthly installments but the disadvantage is that you are paying for the use of car. The miles are decided by the dealer and you cannot drive the vehicle beyond these miles.
So, buy a car of your choice as our 10 easy ways will be of your good help in and financing a car won’t be an issue anymore.