One of the nicest luxuries in life is a new car, however it’s not a simple financial decision. There are all sorts of monetary considerations involved in purchasing a new auto and it’s possible that it’s the most expensive thing in your life besides your home. So, what’s the best way to finance a new auto?
Cash or Savings
In a situation where interest rates are not offering much in return, it’s often a better idea to use them to purchase an item, rather than take a loan out to do so. Taking a loan out at a higher rate would result in you paying more back. Of course, using savings is not as simple as it seems. You still need money for emergencies and other issues. However, using your savings for as big of deposit as you can afford is often a good idea.
Getting a personal loan from a finance provider can be a good way to get a car loan and there are all sorts of products out there that are ideal for autos. Shop around, check your credit report and look for the best deal on interest rate by comparing the APR. Personal loans can be quickly and easily arranged and can be got at a very competitive fixed rate nowadays with some shopping around. Even secured loans can be quite in-expensive and it’s worth looking at the likes of Baker Financial for details on this option.
A hire purchase plan is paid in installments set over a period of time – often between one and five years. They often involve a deposit of around 10 per cent or more and can be arranged by the auto dealer and are often quite competitive for a new car. If you are buying a second hand car they may not be fantastic as regards interest rates and not nearly as competitive. The loan is secured against the auto, so if you fail to keep up repayments it will be taken away. The hire purchase option is quite flexible and easy to arrange, though you don’t own the car until the last payment is made.
This plan is similar to a hire purchase and often has very low repayments. It however differs in a number of ways. This sort of plan means you don’t pay for the car outright, just the difference between a sale price and the resale price when you go to sell it. This will take into account things such as annual mileage and other variables. These payments are spread over 1-3 years and at the end of the term you have a few options. You can give the dealer the car, trade it and take out a new personal contract with the dealer or pay for the car.
Leasing a car is another option to put a new car underneath you. This involves you paying a fixed cost to rent or lease the car over a set period. Your maintenance and servicing is included, though you do have a mileage limit. You then hand the car over at the end of the contract, but don’t have to worry about the depreciation of the car either.
These are just some of the great ways you can have a new car and provide some food for thought for those looking to get a new auto.