Car finance options
Nowadays throughout the world a large range of new and latest car models are being launched. A large number of variants with different colors and features are available in the market. This all has made a large section of people interested in purchasing these cars. Now there arises a need of arranging funding for car purchases. So, there is need for the best car finance options for facilitating car buying. There are a number of car financers who through a hire-purchase agreement help clients purchase the latest car models. Choosing the best car finance option offering the lowest interest rates is very important.
Choose the best finance option:
A proper assessment of your financial position is very important before choosing a car finance option. Car finance involves paying equated monthly installments for a specified time period. So, the monthly installment budget and finances must be worked out in advance.
Some important aspects that need to be studied for choosing the best car finance option are:
1. Dealers, banks and car loan lenders offering best deals should be chosen:
Before going for a car finance option a search of such lenders and banks should be made which offer lowest interest car loans. An advice of an auto expert or a relative who is experienced in taking car loans is very helpful. Always compare from a number of financers and choose the best. Choose a financer who offers the lowest interest installments for a specified duration. Important factors to be considered are the down payment (advance amount), the loan term (one to five years) and the interest rate.
2. Market research:
Select a car model of your choice by a market research of various variants available for a particular designated budget. Consider all points like ex-showroom price, insurance costs, repair and maintenance costs, resale value, registration fee, extended warranty etc. These points help you consider the most suitable car finance option by finalizing the amount you have to invest. Most important aspect in the above is the maintenance costs incurred for a particular car model. So, a market research of car models becomes very essential.
Knowledge of interest component:
If you are already familiar with various financing options available and have a good history of credit borrowing you can avail low interest loans. This helps fetch low monthly installments and also lowers the overall interest paid for a particular loan time frame (one to five years). If you are regular with your previous loan installments a dealer or auto loan lender cannot take you lightly. So there is no high interest charging. Also you can calculate the interest paid by a simple mathematical method.
Duration and need for buying a new car:
You can choose the best available financing option by having clarity of the purpose for which you need a car. Also the duration of use of a car is very is very essential. You might require a car for a business or a job. In some cases companies benefit employees by offering new cars for travel while in job. Here a lease deed can be made for which the down payment and monthly payments are low. A company owns such cars and makes payments. In case you decide to own a car on your own then an auto loan is the best possible option.
Car finance rates:
When we talk of car finance options we should also get some insight into various car finance rates. Finance rates vary for new and used cars respectively. New cars are generally financed anywhere between eight percent to sixteen percent interest rates. These interests are generally on a reducing scale. In case of used cars the rate of interest is on the higher side (more than 18 percent on reducing scale). This is due to the fact that used cars have a depreciated market value and fetch higher interest rates for a loan amount. Thus, before opting for a car finance option the associated rate of interest should be studied in detail.
Early repayment of car loans (foreclosure):
Before going for a car finance option you must be very clear with all the repayment schedules and formalities. For repaying a loan before a specified time frame you might have to pay some foreclosure charges (or advance loan closing charges). These charges are three to four percent of the remaining outstanding loan amount. These charges are in addition to full repayment of the loan amount left. So, a complete knowledge of early loan repayment and requirements is essential when going for a car finance option.
Bank car finance versus dealership financing:
When going for a car finance option a customer has an option of getting a car financed directly through a car dealer. Dealers offer their finance options to generally all walk-in customers. Here a customer can get an idea of an installment of a particular loan amount from a car dealership. Before finalizing a particular finance option, rates should also be taken from various banking institutes for making comparisons. A car finance option from a nationalized bank always fetches low interest rates and lesser risks with respect to dealership finance. A dealership might not offer such low interest rates due to its tie-ups with various financial institutions.
Limitations associated with a car finance option:
You should always consider the limitations associated with a car finance option. One limitation in a car finance option is the interest factor itself. Most customers don't have the knowledge and time to calculate the interest being charged. Also in case of non-payment of loan installments a financing company has the right to claim back the financed vehicle from a customer to cover its remaining loan amount.