Changing your car is an increasingly important budget, especially with current technologies that continually drive up prices. And today few households can afford to buy cash for their new car. This is why more and more individuals are using auto financing, which is also the second largest line of expenditure after real estate. The funding allows to spread over several years the payment of the monthly payments, and at the same time to offer a vehicle generally more recent. Explanations.
Ideal finance solution for acquiring a new or used car, auto credit is an assigned credit. That is, the purchase is conditioned by obtaining the loan. Clearly, if you do not get your credit, the sale is automatically canceled. The auto loan is somehow more protective for the consumer, since the money is dedicated solely to the financing for which it is contracted. A car loan can be obtained directly from his banker on presentation of a quote or a purchase order, or from a credit agency. Be aware that the dealer or dealer from whom you wish to purchase your car may also offer financing.
The personal loan
Another financing solution is the personal loan. It is not legally bound to the purchase for which it is made. In other words, by opting for this solution, you can borrow more than the amount necessary to purchase your car to cover other costs if necessary such as insurance or possible repairs. If the personal loan has certain advantages, its main disadvantage is that it may cause greater indebtedness compared to the main purchase for which it is intended. If, for example, you borrow a certain sum and you finally decide to buy a cheaper one, you will still have to pay the monthly installments corresponding to the loan. And in case of early resale, you may not be able to pay off all of your credit.
Lease with option to purchase or LOA
The LOA is an increasingly popular financing solution, especially for the acquisition of new vehicles. This is, in other words, an affected loan offering reduced monthly payments for a number of years. At the end of the contract, the renter is free to return the vehicle to the concessionaire, or to acquire it definitively for a sum defined in advance. Of a relatively short duration, the LOA has the advantage of being able to change vehicles more often.
Long Term Rental or LLD
An alternative to purchase, the LLD allows you to rent a car – usually new – for a certain period of time, with relatively low monthly payments. At the end of the contract, the vehicle is returned without possibility of redemption. The LLD is a solution to include in monthly payments the cost of maintenance or insurance. Be aware, however, that you are not the owner of the vehicle and that you are subject to a maximum annual mileage determined in advance. Apart from financing, the cash purchase is still a solution, but which implies the possession of relatively large savings. Be aware, however, that most funding offers insurance that will take over in case of a blow. The financing avoids the loss of its savings, and also makes it possible to to be more serene. Payments are spread out and you are generally protected in the event of illness or loss of employment. Benefits that you do not get when paying cash.
Key points to remember: – The funding allows to spread the payments. – It offers the opportunity to buy a newer vehicle. – It allows to protect itself in case of incident of course (insurance).