When you are planning to buy a new car, there are many different things that you have to consider. This is a big step for most people and making the right decisions and choices is vital with every aspect of the process. If you are new to the car buying process, you can get help from experts to assist in making some of the key decisions. Not every buyer has all or some the funds available for their next car purchase. So, one of the things you must think about is how you will finance the purchase of your new vehicle.
The cost of buying a new car can be high, so it is important that you look at your financial situation and what your options are. It is also important that you realize your options will depend on your financial status, credit score, and a range of other factors. By doing your research beforehand, you will have a much better idea of what your budget is and what sort of vehicle you can afford to purchase. In this article, we will look at some of the options you might be able to consider depending on your financial status and circumstances.
Getting Dealership Finance
One of the options that you might be able to consider is getting finance from the dealership you get the vehicle from. This is a popular means of financing a car purchase, and it is quick and simple to make your application. Of course, there is no guarantee that you will get the finance, as it does depend on your credit score, income, and other key financial information. If you do decide to choose this option, it is well worth checking your credit score beforehand to see whether you are likely to be accepted for the finance.
It’s always worth checking the interest rate being offered from Dealerships as part of the finance package. A low interest rate may be at first look a very attractive option, however, the fine detail of any hidden fees, commissions, structure of the loans terms, residual obligations, early payout penalties should all be considered against your personal and financial circumstances.
Getting a Car Loan from the Bank
Another option you might be able to consider is getting an unsecured car loan from your bank. Again, these loans are easy to apply for and you will generally receive a decision very quickly following the submission of your application. As with dealership finance, it is a good idea to order your credit report and score so that you can get a better idea of whether you are likely to get a bank loan, as they often require you to have a decent credit score as well as looking at your income, outgoings, and other financial information.
Considering a Secured Loan
If you have a poor credit score, you may struggle to get traditional finance for your vehicle purchase. However, there are options that you can consider. There are subprime lenders that specialise in loans for those who have a bad credit history and score. However, the interest rates charged on these loans can be crippling because they are higher-risk loans. If you are a homeowner, however, you may be able to consider taking out a secured loan, which could mean lower interest rates because you have collateral in place.
Some potential car buyers may have set up “”Draw Down Facilities’ within the structure of the home mortgage loans which they can access to use funds for a car purchase. Often the interest rate can be favourable and lower compared to a stand alone car loan from a banks or finance providers. However, a discipline application of paying off the loan like a similar structured car loan will ensure a reasonable interest component. Otherwise, the perceived cheaper finance will long term become a more expensive option as the term of a normal mortgage can extend out to 30 years.
Choose an Affordable Vehicle
No matter which finance route your take, it is important to find a vehicle that is right for your needs but is also affordable. You can get help with this from the experts at My Next Car Buying Advocacy. Simply get in touch with our team to find out more about our services.