Buying a car can be expensive so you need to find the most effective way to fund your car purchase. There are lots of factors to be considered in buying a new car. But the excitement is undeniable of buying a brand new car. So, if you are one of the many people who buy a new car, here are your options for paying.
Borrow from friends and family
If you know someone who can lend you money, this will be the cheapest option. However, please be reminded that many friendships and family relations have been destroyed or created because of money.
Use your savings
If you have savings, you might be tempted to save it and apply for a loan. However, the loan interest fee is likely to be much higher than the interest you will receive from your savings. Therefore, the best way to buy a new car is through your savings.
Take advantage of the facilities on a credit card
If you have a credit card with a decent interest-free period for new purchases, then this might be worth considering. Obviously, this will depend on whether the lender gives you quite a lot of restrictions. At the end of the term, you can delete the debt or transfer it to another card. You will also have some level of protection. Thanks to the Consumer Credit Act.
Take a personal loan
The benefit of an unsecured personal loan is that there is no need of a collateral so the risk is lesser. If you are thinking of applying for a loan, it is very important to consider it wisely. Make the right decision of applying for a loan of just the enough amount for your car purchase and that you can pay it comfortably.
Car rental options
Rental purchases involve payment of a deposit - usually around 10% - and then pay the balance, plus interest, during the loan period. You will not have a car until the last payment is made. If you miss a payment, the finance company can also pull back your car.
Interest rates are quite high but if you pay until the due date of the loan period, the car is yours. Also, you will get brownie points for being a good payer.
The ease of doing this credit makes many people replace their cars for just a few years. You pay an advance - about 10% - and low monthly installments for a fixed period and deferred payment arrangements until the end of the contract.
At the end of the term you have the choice to pay this lump sum, return the car, or sell it privately to clear the unpaid balance. However, the car must be maintained properly and still use the agreed mileage.
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