Buying a car, whether old or new, is no easy task. There are a lot of things to consider and at the top of the list is financing. If you’re buying a car upfront with cash or your savings then you won’t have to worry about monthly repayments. Unfortunately, only a few people can only afford to go this route.
If you’re like majority of people who want to finance your car purchase, there are many options available and we’ll try to briefly get into them one by one.
Taking out a personal
Most people opt for a personal loan when buying a car. You can borrow from banks or a finance provider. All you need to do is prepare the down payment and use the loan to cover for the rest of the car’s cost. Just make sure not to secure the loan on a major asset like your home. You don’t want to put it at risk of repossession in the event that you can’t repay the loan.
Another option is called hire purchase where you may be required to put down a 10% deposit. You will then pay for the rest of the car’s cost through monthly installments from 12 to 60 months depending on how you want it set up. Your dealer typically arranges this type of financing and the loan is secured against your car. This means that you only own the car once full payment has been made.
Personal contract plan
This type of financing is just another version of hire purchase only that the monthly repayments are lower. For this one, you don’t pay for the car outright but instead only pay the difference between the sale price and resale price as per annual mileage. Payments are done over the term of the agreement, typically 12 to 36 months.