Are you looking to get a new car?
With a wide range of options from large, family models to sleek and stylish ones, cars are a necessity more than a luxury these days. But many people don’t have enough money to buy one right away. That’s when car finance options and car loans come into the picture.
It is essential to know the different ways of getting car finance. But, although some lenders claim that they will walk you through the entire process of car loans, they tend to skip crucial pieces of information.
To bridge the gaps your lender might not fill, here are some helpful tips and tricks about financing cars.
Car Finance Option #1 – Car Loan
Most people buy a car after getting in touch with a reliable car loan provider. If you are purchasing a car for the first time, you should understand the process in detail.
Besides first-time buyers, people who want to rebuild their bad credits also require car loans. They contact a car loan company, take out a bad credit car loan, and make sure they pay their fees every week. This helps to improve their credit scores. In fact, their credit scores turn from red to green in almost no time with such an activity.
There are two types of car loans that you should know about: secured and unsecured.
Secured loans allow the lender full rights over the car. Although the borrower drives it, the car technically belongs to the lender. If the borrower can’t pay anymore, the car will belong to the loan provider.
With so many car loan providers operating in Australia, finding a reliable one will not take a lot of time.
According to the finance experts from Max Funding, “the simplest way to get the most out of your car loan is to limit your applications. Applying to many loan options can negatively impact your credit score if you are routinely turned down. Do your homework. Comparing your car finance options can mean saving hundreds, if not thousands, of dollars.”
Car Finance Option #2 – Dealer Finance
Dealer finance is similar to car loan providers. With this option, dealers provide finance for your car and you need to pay them back. But, dealer finance options often insist that clients buy the car on the same day. You are encouraged to sign up for a loan on the spot so you can drive home your favorite car that same day.
This looks like a convenient option, but the expenses are relatively higher. It may put you in so much debt that coming out of it will become a challenge.
Before you sign for dealer finance, get everything the dealer has verbally promised written down in an official document. This document could be a completely itemised sales invoice with all relevant costs and inclusions. Such a document can protect you big time in the long run.
Car Finance Option #3 – Factory Finance
If you don’t like the terms and conditions of dealer finance, you can opt for factory finance instead.
With this system, car manufacturers offer you a deal that is significantly lower than what you’ll get from dealers. However, it works like a lease. The moment the lease ends, you need to return the car to the manufacturer. These deals usually last for four years.
If you don’t have any specific car model in mind and want a low monthly payment, factory finance is the way forward.
Factory finance also has a few drawbacks. They note that “the low monthly price can accumulate and cost more over time. That is why you need to consider various factors before finally choosing your favorite car or a finance policy to purchase that vehicle.
Are you ready to pick your dream car?
Now that you know a lot about different car financing options, you can make a more informed decision. Always remember, you need to fully commit to the finance method you choose. So choose the one that you know you can afford and whose deadlines you can meet.