There are different options available for buying a car, and buying on finance seems to be the most generally accepted methods available. We will not dwell on the controversy between a used and new car, as information abounds on this debate on platforms like reviewsbird.co.uk. If you do decide on a used car, however, buying on finance is considered easier on the buyer, since it means paying every month for a used car, which roughly translates to the seller loaning out the car to the buyer until the price of the car is covered.
There are different schemes under the car finance umbrella, such as the hire purchase, personal contract purchase, car loans or dealership financing options, among others. For more information about how each type operates, it is best to read reviews of car dealers on different independent websites. When buying a car on finance, it is important to know the advantages, which include not having to put down a chunk of money at once, cheaper insurance, less tax, while the right deal can have additional advantages of adds-on such as warranty extensions, service discounts, breakdown cover, gap insurance, paintwork protection, etc., all of which you might have to buy separately without the finance plan. That does not mean that buying a pre-used vehicle on finance is not without its challenges, which could include high-interest rates, inability to fully claim the car as yours until payment is fully made, and the fact that some deals pose limitations to the customer, which could be by capping the mileage, among others.
After objectively comparing the benefits and the limitations of the different types of financing options and deciding on which is best or appropriate, the prospective buyer is advised to follow the following steps for best results:
- You need to decide and arrange your financing option ahead of the purchase, whether you are using a credit union, a bank or a car dealership’s financing option. This ensures that you are not winking in the dark, as no dealership will release a car to you without ensuring that there is a sustainable financing back-up.
- You should have a realistic opinion of your credit score, as this allows you to know the best option of financing open to you. If you have a solid credit score, more options are available to you than if your credit rating is shot. Your credit also affects the interest rate, so if you have any outstanding loans, you can try to clear them as efforts towards repairing your credit.
- You should also compare different financing options for used cars to arrive at the best plan for you. Don’t just look out for the monthly bottom line; rather, calculate all the cost involved to get a full picture of your total expenditure on the car – the down payment, the monthly payments, the interest rates and any other fees.
- It is important that you know the difference between private parties and dealerships, and watch out for the difference. Dealerships are believed to offer more security and more advantages than private parties, but getting a vehicle history report can tilt the balance in favour of private parties. It is important to note that private parties might offer peer-to-peer financing, which some people might find preferable to third-party lending.
- Also, research extensively to get the right auto insurance, and try to make your payments regularly and refinance your car loan if you can. If unfortunately, you default to the extent of an imminent repossession of your vehicle, you should surrender the vehicle voluntarily to the dealer than allowing for forceful repossession, as the repossession cost will be added to your loan in some states.
- In the alternative, if you can afford it, the best financing option is to pay outright.