Car Finance Options and
Solutions |
By Amelie Gam |
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Because most people don't have cash to buy new cars, it is often a
choice between leasing and using an auto loan. We will further
analyze the benefits of each type of car finance option. The choice
that you make will heavily affect your income over the next years.
The first thing you should realize is that the decision of buying
with cash or lease doesn't involve just the money aspect, but the
time aspect as well.
The car finance option you choose
depends on the importance you give to owning a new car. If you value
having the latest models on the market, then this will justify
spending more money on this privilege. If your view of a car is
orientated towards transportation and comfort (you want a car for
practical reasons), then owning the newest model should take a few
steps back on your priority list. You should think about these facts
first and then consider the more tangible issues of car finance
options.
The car finance deal that you are going to make
starts when the salesperson asks you what kind of car finance option
you want to use. Your answer can be one of the following: buy the
car, lease the car or pay cash for the car.
If you want to
buy the car, the dealer will ask you to fill in a credit application
based on your credit scores. An auto loan will be arranged through
the dealership. This car finance option usually is a 36-60 month
endeavor. The longer the time the lower the payments will be. The
amount of money you pay for this car finance option depends on your
interest rate, down payment and total sum of loan. Also be careful,
as the dealer will want you to make a large down payment. This car
finance deal is based on the fact that, until you pay for the
vehicle, the lending institution will own the car. The cars
ownership papers will be sent to you after all payments have been
made.
There are some important aspects about car leasing that
make it attractive to customers, such as: low monthly payments, low
down payments and low maintenance costs. The main advantage is that
a customer will get a car without giving too much money at once. The
monthly payments are kept at a low level, lower than buying car with
an auto loan. Another benefit of this car finance option is that the
car will have a 3 year warranty and will be covered for mechanical
failure during this period. As you can see by now, this looks very
attractive and affordable by anyone, but there is a slight
disadvantage (the same as in the case of a loan). You will have car
payments until the entire sum of the car is paid. Only when you do
this, the car will finally be yours.
From this point on the
car finance deal will be over and if you have to begin leasing again
the assumed responsibility of payment rates will last a long period
of time again. The conclusion is that this car finance option (using
the leasing method) is more expensive on a long term. Car leasing is
actually the most expensive way to go, but those who favor it point
out that over a 10 year period this car finance method is the best
the average income customer can support.
If you are
interested in leasing, this car finance option has some variations.
All auto leases allow you to drive the car for a limited number of
miles per year. The more you drive, the higher your payments will
be. However, if you come to think of it, you save money in the long
run. The contract will contain a residual price for the car, which
you will pay at the end of the lease as the car passes into your
possession. Be careful because this is the riskiest car finance deal
of them all!
If you decide to pay cash for the car the
transaction everything will be very simple. This is the most
favorable car finance deal if your income can support such a large
transaction. Negotiating with the dealer will most likely make this
car finance option even more attractive. Choose wisely as every car
finance offer has its own ups and downs, and every car finance
company will try to persuade you into taking their option into
account.
When buying a car, a lot of money is involved.
Depending on the budget you are willing to spend there will be a car
finance option to your liking. A compromise has to be made: one can
either spend a lot at once, or spend a greater sum during a longer
period of time. Your car finance option will affect your pocket
anyway; it's just a matter of how much money will be given in how
much time. |
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