What are the Car Financing Methods Available for New Car Buyers
Car financing is making the way to buy your favourite car on loan terms that are easy and flexible. This is quite a changing event, and come with prospects too.
The UK’s auto industry finance industry is showing phenomenal boom in purchase of new cars. There is an appreciable boom registered in the motorists opting on car leases for buying branded cars, and this not going to act as a catalyst for credit crunch. This car finance is backed by assets and uniquely modelled. Lenders are a bit conservative this time.
Understanding the Payment Options of Car Financing
Finding the car of your dreams is a huge challenge, but making a decision on how you are going to repay the loan back to the lender comes out as a biggest blow. It is your decision on the way you like to pay, and when you want to pay. The essential part here is that it should meet your needs. You need to spend quality time in deciding the options that are made available to you. Here are the options to look into:
Pay in Hard Cash
Paying in cash is one of the reliable, easy and one of the most cost-effective methods available before you. Make sure, you have sufficient funds in your savings account. Do not try to rush things for yourself as it is not going to take you anywhere.
Personal Car Financing
Personal loans are one of the credible options available to the car buyers, and this type of car financing option is available within FinTech market. With a Car Finance from online lender, you can think of spreading the loan over the period of seven years. There is a likelihood that monthly repayments may sweat you than other payment options, but at the end, you are the proud car owner. When calculated, you are going to pay less in comparison to other options available out there. Personal car financing, is undoubtedly one of the cheapest means for borrowing over the long term payment cycle. On the flipside, if you have poor credit score, it is not logical way to go out for personal car financing. A good alternative could be where you look out for the car financing methods offered from your car dealers.
Purchase on Hire
It is yet another fruitful and effective payment options designed for the car buyers. Here, after paying the money deposit of roughly 10% or maybe even slightly more, the car buyer fixes a monthly repayment cycle spread across a selected time frame. The significance here is that you do not become a whole sole car owner, until all payments are not cleared.
Car leasing is a weighed-up payment option and it works like a long-term rental. The idea here is that car buyer would continue to make fixed payments every month and use the car till the time the contract gets matured. Car leasing comes in two formats - personal contract hire (PCH) and personal contract purchase (PCP). The monthly repayments are low in comparison to other options of car finance, but mileage restriction is always there.
When you have the PCH car leasing, you do not become a full-fledged car owner, although with PCP, there is advantage for you to become a car owner after finishing the contract through ‘Balloon Payment’.
Repayments Made with Credit Card
You can think of using credit card to pay either the entire payment, or part of it, as you like. Paying by using credit card, offers you extra line of protection. The catch is that you need to pay a minimum of £100 through the card, and besides all the repayments running against your credit card too. Are you paying the card handling fee? There are car dealers, who may ask for it. This fee is likely to come up as 3%. You may even have to face a critical situation where the dealer is not accepting your credit card at all.
Peer-to-peer financing or P2P financing is process of borrowing and lending among the individuals through a registered website. It is one of the quick means of financing known. This method of financing detour traditional financing methods, offered through the way of banks or building societies, one always need a good credit score for availing attractive interest rate.
Precautions before Car Financing
If you have worked out on serious planning on taking out car finance arrangement any time soon, you need to delve inside it.
Car loans have been on the rise, and the figures clearly point in this direction. Bank of England’s statistics indicate that in the span of last five years, car finance in the UK market has frown overwhelmingly high, keeping at 29pc of the £198bn total. From the £58bn available against car finance, £24bn is with banks totaling the bulk - £34bn – as it appears on accounting records of car manufacturers and dealers. More significantly, the manufacturers are also working hard for setting the realistic residual values for cars to prevent the drop in already inflated car pricing.
However, with respect to financing a car and keeping the repayments within your control, it requires careful structuring, planning and motivation too. As an informed car buyer, you will avail benefits of car financing in the ongoing scenario. You will be led in the right direction, and the car you go with is enough to fulfil your dreams.
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ABOUT THE AUTHOR
I am a financial consultant and have love for car financing. Cars excite me beyong everything, and finance is my professional passion. I would continue to love it my entire life.