Imagine the feeling of getting into your new car. Imagine that liberating new car smell that fills your mind with endless possibilities and the freedom to do and go wherever you want. Getting a new car, or acquiring that ride you've been eyeing for a long time can be an exciting experience. But what happens if you can't afford it?
Vehicle financing is the answer for most. It's the easiest way of getting behind the wheels of that car that's just right for you, but not quite for your pocket at the time. Think of it as a 'use now, pay later' deal that can help you to get the car that you want. But as with all such deals, it usually comes tagged with terms and conditions that can be overwhelming for any buyer. That's why it's important for you to know which financial avenue is best for you, your pocket, and your new car.
Financial institutions generally offer two different types of car financing and although both these require a monthly repayment plan, they vary in factors like interest, additional payments, the length of the repayment, and most importantly ownership of the car you're driving.
The most common and to some more financially sound option is an Instalment Sale plan. This where the bank puts up the capital required for you to purchase your new car, and you repay the amount including interest over a set period of time in monthly instalments, usually ranging from 48 to 72 months. The longer you choose to pay, the more interest is charged. This option also grants more flexibility as you can choose between an upfront deposit, a balloon payment structure, or a residual value payment at the end of your repayment term.
These are all factors that can decrease the monthly contribution you make. The biggest advantage with this option is that you can own your car at the end of the repayment term, with some financial institutions even offering ownership at the start of the financing agreement. However, banks have the right repossess the vehicle if the repayment plan has not been met and you've skipped payments. This is why it's important for you to consider your financial security for the length of the repayment period you decide on, and also source out the best deals with the least amount of interest.
Financial institutions also offer financing in the form of a lease or rental agreement. This is a contractual agreement that allows you the use of the vehicle for a flexible period of time with monthly contributions, while the bank still owns the vehicle. This option is ideal if you're currently receiving a monthly car allowance from your employer, or you're intending to change cars after a certain amount of years. A lease or rental contract can also translate to lower monthly repayments, and you get first choice of whether you'd like to buy the car at the end of the term, or renew the rental agreements with a new vehicle. Deposits or balloon payments are also more negotiable with these type of contracts, with some rental agreements even covering the maintenance costs for the time you rent the vehicle.
When buying your ideal vehicle it's vital that you look at all your options to get the deal that is most financially suited to you. In most cases, dealerships offer a Finance and Insurance specialist that can assess your personal financial abilities and can propose specified financial solutions with different banking institutions. This is when you can also consider added benefits best for you like maintenance and service plans, as well as insurance products which is a mandatory feature across the board when it comes to all these car financing options. These all needs to be included in the amount you are ready to pay per month.
The Finance and Insurance specialist can also make the process easier for you by submitting the necessary applications to the relative banking institutions in order to get the best deal for you. Alternatively, you can source these deals yourself and fill out an online application form with the respective financial institutions at your own convenience.
There are many factors to consider when choosing your new car. Perhaps you're after a faster model, or require a bigger model for your growing family, or maybe you just want the convenience of being able to get from point A to point home. With car financing, that car, and what you want it for can be closer than you thought. It only requires for you to sit down, check what you can afford, and check where you can get the best for what you can afford.
Who knows? That new car smell could become a reality for you. Make it happen.
- Keenan Johnson