Financial Options to Consider When Buying a Car
Buying a car is no minor purchase. For many of us, our vehicles are the second most expensive items we invest in, just behind our homes. There’s a whole lot of decision making that will go into this process. You’ll spend time deciding on a make and model. You’ll spend time deciding whether to buy new or used. You’ll spend time browsing the market deciding what vehicle you really want. But eventually, you’ll inevitably get to a stage where you need to settle on how you’re going to pay for the vehicle. Now, there are multiple options so make sure to read through the following information to decide which is best for you!
The first option, which is pretty rare in real life practice, is buying a car outright. This is an appealing option. Once you’ve paid for the vehicle, it’s yours. No monthly payments. No debt. Just a vehicle that you can call your own. However, when it comes down to it, there really aren’t that many people who can buy a car outright – especially not a brand new vehicle. If you decide to buy a secondhand car outright, it’s important to make sure the vehicle is in full working order before handing the cash over. Conduct a history check, get a professional to check it over and complete a test drive beforehand.
Loans and Finance Plans
A second option is loans and finance plans. These are two different types of payment for a car, but they fall into a similar category, which is borrowing money to get the vehicle. When you take out a loan, a lender will put the requested money in your bank and you’ll slowly pay it back to them in installments with added interest. You will pay the individual selling the car with cash or by transfer as if you were buying the vehicle outright. You can find out more about the paperwork required for car loans here. When you take out finance, you enter a credit agreement where you take the vehicle away and pay the seller or a finance company back monthly plus interest.
Leasing or “Hiring”
A third option is hiring or “leasing” a car. You’ll be the only user of a vehicle and will pay for it on a monthly basis, but you will hand the vehicle back to the rightful owner (this could be an individual, a garage or a dealership) eventually. Often, you will pay the depreciation on the value of the car while you are using it.
These are just three options when it comes to getting your hands on your own car. There are others out there, but these tend to be the most popular. Hopefully, some of the information provided will help you to settle on the right option to suit your needs and preferences!