You find that most of the car dealers offer you car finance as this works out really profitable for all of them but you can get confused with the innumerable options available to you. You should be aware that the finance for the purchase of your car is not always the cheapest option with a car dealer. You might think of a personal loan, credit card or any other form of borrowing which can fit better to your circumstances. Let us look into the dealer car finance options available before you make your choice.
Think of Hire Purchase
- This works best for those who are looking for an easy form of car finance which can be arranged easily. The typical cost works to around 7% to 10% APR.
- Here, you need to pay an initial deposit which is almost 10% of the price of the car, after which you pay the remaining in monthly installments along with the interest.
- You need to pay the administration fee with the first installment with the ‘option to purchase’ with the last installment.
- A higher level of protection of the consumer is offered with a high purchase offer when compared to a personal loan which is insecure. You need to know that with this you do not own the car right till the contract ends so you are not able to modify or even sell this car without the permission of the lender.
0% Finance is Another Option
This seems to work best for those who can pay a big deposit and there is no typical cost. All you need to do is pay the initial deposit which works out to 30% or 40% of the price of the car and the rest of the cost is paid in monthly installments without any interest. The drawback to be taken into considerations here is that, the loan term is shorter compared to the other forms of finance so the payments made monthly work out higher. You do lose out on discounts on this type of car finance, and apart from this, this financial option is applicable only to specific cars.
A New Car can be Possible
- If you like to drive a new car without the hassle of owning it, you can think of leasing. You need to pay a fixed specific amount every month, choosing a car after deciding how long you require it for, stating your annual mileage.
- These factors can determine how much you will be paying each month. There are some schemes which include maintenance.
- You need to make a payment in advance for the rental for a few months and also take out insurance so as to cover damage, which can be expensive for some cars.
A Personal Contract Plan can be thought of
If you want to keep your repayments low and like a new car every couple of years you can think of this. You need to know that the typical cost works out from 7% to 14% APR. You need to pay a deposit, and the minimum guaranteed future value is the deferred amount which is decided by the finance company. You get a guarantee from the lender that your car will be worth that amount at the end of the contract.
You have three options when the contract ends:
- You can sell the car privately so that you are able to fund the final payment.
- You are given a choice of paying the deferred sum and keep the car.
- You can return the car to the dealer.
Do you still want to know more about car loan? Visit here to get few more additional details about car finance Melbourne.