As life gets hard, the things that were once luxurious now get to become hard to come by. This has made the purchase of an asset like a car not an easy decision as it affects the cash flow of one’s finances. We have to agree that hardly do we go and make purchase of a car and settle the full payment. This has led to the emergence of different kinds of financing for the purchase of a new or old car.
The common type of purchasing will include:
Personal Loans
This is a loan that is given to individuals. One has the option of taking up a loan and finance it on his/her own may it be for buying a new car or second hand car. To get this loan one approaches a financing institution as it is easy to approach a financer and get a loan that is suitable for one specify requirements. After all, the banks are in business and are fighting for a market share. However, one should be careful and read through the fine prints and check out for any additional charges, penalties. It’s advisable to get professional assistance from a legal expert if one is not good are reading the legal jargon of the loan agreement.
The advantage of buying a car through personal loans is that once you buy the car it is your property and you have the right to use or dispose it of in whatever manner that suits you.
Hire Purchase
This involves getting into an agreement between the car dealer either of used or new car and the buyer. The dealer usually ask for a down payment in form of a deposit that ranges from ten to twenty percent of the total price of the cost then agree with the buyer on the installments of the balance remaining. The installments figure will include the interest that will keep accruing as the duration of clearing the payment stretches. The disadvantage of this is that the car remains the property of the owner until the final payment is made.
Commercial Hire Purchase is a modified form of Hire Purchase that allows a firm to borrow up to hundred percent of the purchase price of the car.
For homeowners, they have an option of financing for a car through remortgage. This is where the homeowners (buyer of a car) re-mortgage his or her house and with the extra cash acquired he/she uses the extra money to buy a car. This is also available for those with existing loans as they can ask for a top up of their previous loan and use the extra cash to buy a car.
Student Car Loan
Most financing institutions increase their market share by tapping into offering auto financing to students. This has been enabled especially with the student undertaking part time job to enable them cater for their needs. The companies that mostly offer the college student car loans also consider that most student don’t have a good credit history thus the loan is repackaged to accommodate for this.
Also see: The Different Types of Loans Available.
The Different Types of Loans Available
There are many different kinds of loans available in the market. Finding the best loan that will accommodate your needs is going to take a little research. Below is a list of different kinds of loans for different types of purchases.
Personal Contract Purchasing
Under a tight budget, an individual can opt for the option of personal contract purchasing commonly referred to as PCP. This give one the freedom to use the car for a particular duration as agreed with the owner or dealer with the option of buying it once the contract period is over or return it to the owner. The advantage of this is that while the payments that have been made before account to the payment to be paid for the value of the car, the value of the car will have reduces as cars depreciate.
Online Auto Loan
Many institutions have come up with offers to individuals to purchase automobile online. This has really made the purchase of car through financing a painless and quick experience hoping that one is not falling prey of the numerous scams that are also coming up.
This is getting to be the most popular method of car purchase method as not only is it relaxing and time saving, one also get to choose a car loan company that has a low Annual Percentage Rate, get to choose which offer to take as the internet act as a one stop shop for all the Online Auto Loan financiers and there is no worries of being bad credit as online car loan companies don’t follow the strict regulations that banks follow up on issuance of credit facilities.
Private Party Car Loan
This is where a neighbor or friend wants to sell his or her car and the two parties get into an agreement on how to settle for the payment of the car. It characterized by the absence of a dealer.
With the emerging of the internet, it becomes popular especially with sites that sell out personal items like craigslist and e-bay. The buyer will in most cases get the description of the car with all the other particulars such as mileage model and make etc. Once satisfied, he makes good the payment.
Fleet Financing
This is applicable where an institution or business firm is in need of several cars but the financial institution can opt to offer them the required amount of money to purchase the cars. One then approaches firms that offer fleet solution such as Wells Fargo and Budget and they provide them with automotives to use as they made good their payment depending on the kind of agreement they have with the fleet company.
This is not a conclusive list as there are several others types of loan available depending on the institution or agreement with the dealer. However, when taking a loan one has also to consider the type of motor vehicle desired as it affects the type of loan that available to him or her, how much he or she is planning on borrowing, whether he is considering trading in, the interest rate for the car loan and mode of payment and duration.