Financing the purchase of your car can be difficult. Recent research has highlighted the fact that most consumers have decided how to pay for their vehicle even before visiting a forecourt.
Reasons for this include high interest rate charges and the motor trade’s poor reputation. Showroom finance is often not considered as an option, with high street and online lenders greatly preferred, perhaps not surprising considering that they do traditionally provide better car finance deals.Bad Credit Finance Auckland
There are six main ways in which a new car can be financed. The first is a credit card. However, high interest rates mean that this should only be used as a short-term measure, possibly to pay a deposit. One of the most popular ways of paying for a car is through a personal loan. This simply involves taking out a loan with a bank or other financial institution, and can often be arranged over the phone. Interest rates are competitive and you can pay for the whole cost of your car. Alternatively you could deal with your existing lender if you have a mortgage. Money can be borrowed from a mortgage provider, either by getting a second mortgage or withdrawing equity from your house. The advantage of this is that you can deal with your existing lender and interest rates are very low. However, mortgage loans are over a longer period and a penalty may be imposed if you decide to repay the loan early.
Personal loans, mortgage top-ups and credit cards are the three most popular and well-known methods of paying for a new car. However, three additional options are available which may suit certain people. The first is Hire-Purchase or Conditional Sale, whereby you discuss and agree with the dealer how much you need to borrow. The dealer then gets in contact with the Motor Finance Company and pays for the car on your behalf. You then agree to make monthly payments to the dealer, with the car only owned by yourself once the car has been fully paid for. Low interest rates, deposits and flexible payment terms are associated with this form of payment. Bad Credit Vehicle Finance Auckland
If the car you wish to buy is slightly out of your price range you may want to consider a Personal Contract Purchase. In this option you defer part of the cost of the car until the end of the payment agreement, at which point you can decide to trade-in the car, hand it back to the dealer, or pay the outstanding amount and keep the car. This is an excellent way of being able to afford a car which would otherwise be too expensive. The final option for financing a car is simply to rent it, known as Personal Leasing or Personal Contract Hire. In this case you agree to rent the car from the dealer for a fixed period of time, which includes all maintenance costs. This is an excellent choice if you only require a car for a set period of time, such as 6 months. It eliminates the hassle of buying a selling a car and is simply fixed cost motoring.
The Fine Print. It is amazing how few people read the fine print after they sign their documents. They get too excited about the money and the car. But the fine print can be vital to any deal.
