You might be one of the lucky people who knows exactly what they want when it's time to buy a new car. Or you might be the kind of person who goes from garage to garage looking for perfection. After a while, all of these cars start to look the same, and you can't remember which one came with what extras. Your wife and kids say they might leave, and your cat and dog don't like it either. At this point, you might turn to your only friend, the computer, to get ideas and look for deals. You can definitely get them, and like most things these days, it's a simple way to go, with lots of help and advice just a mouse click away.
If you fit into the second group, you have our deepest sympathy.
Getting a loan for a new or used car can be just as confusing as getting a loan for anything else, but making the right choice can save you a lot of money.
Interest-free loans are something to think about. This is usually only available through dealers and is usually only for people who buy a new car. If the car you want is included in one of these deals, it should be a lot easier for you to decide. Most of the time, these deals require a pretty big down payment. Not all models come with no or low interest rates, and the one you want might have a higher rate than most. It's all just a matter of ups and downs. If you like to "haggle," you probably won't get both a discount and a good deal on financing. The best thing to do might be to get the best deal you can on the car and then set up a hire purchase or personal loan on your own.
If you choose rent-to-own, the dealer will be happy. It's easy to set up and is available for both new and used cars. From the finance company's point of view, the dealer will get a very nice commission. When this commission is taken into account, you might be able to get a better deal. That's why the question of how you'll be paying for the car comes up when you're offered a cup of coffee and the serious talking begins. You don't own the car until the last payment is made, so if you want to trade it in for another car, you'll need a settlement figure.
You may decide to take a personal loan. This makes you a cash buyer in all but name. Keep in mind that the dealer will want you to go the hire purchase route, and make sure you do the math. In the end, what matters is how much you pay in total.
Personal Contract Purchase is a type of car loan that is growing quickly. A deposit is made, which is usually about three months' worth of payments. Then, you pay a set amount each month for a set amount of time, usually two or three years. At the end of this time, you can either give the car back or pay the last payment to keep it. You'll know what this number will be at the start of the contract, and it won't change as long as you haven't driven more than the allowed number of miles per year. Again, this is what the contract says, but around 12,000 miles per year is a good estimate.
With this plan, your monthly payment will be less than it would be with hire purchase, but you won't own the car until you pay the last lump sum. Many people stick with the same brand of car and use this type of financing. At the end of the term, they return the car and get a new one of their choice.
You might be better off with a simple lease deal. This is set up with the help of a leasing company. From whichever source you choose, you negotiate the price of the car and then agree on the length of the lease, which is usually between two and three years. Make a payment equal to three months of the agreed-upon monthly payment, set up a source for your monthly payment, and when the time is up, all you have to do is return the car. No trouble, and no old car to sell. Choose, rent, pay, and return.
So, it's up to you to decide. Comparing things carefully will pay off, so do it and put your money to work.
Have fun choosing!
