Buying a car isn’t a simple decision, and it can get pretty tricky for a lot of people. If you’re buying it for the first time it is crucial not to make some common or obvious mistakes. Wondering how to save money and find a deal that suits you? In fact, do you have the right mindset, budget, and plan? Before you make your move it is vital for you to know what are some common rookie mistakes, while also landing the best possible option out of the bunch. Keep on reading and find out all there’s to it down below!
So, what is the most expensive way to finance a car?
An option that you should always avoid is leasing. For a lot of people, this might seem like a good move to make, but it will come to haunt you down the road. The truth is that whether you lease a $30,000 car or take out a loan to buy it, you’re borrowing $30,000 and being bound to this amount of cash and the agreement for the following years to come. On top of this, there are always interest rates that you will pay. When having a loan, you’d pay back everything. When having a lease contract you’d pay back only the projected loss in the vehicle’s value during the lease period. This is called depreciation.
Why a lease might not be a good option?
Most consumers rush into the buying process due to incredibly low and appealing monthly installments. However, you do know that you don’t get to be the car’s rightful owner in the end, right? This is why a loan might be a lot better and a lesser evil than the two. You will have to think about your tax benefit and your credit score, hence why a lot of people tend to go for a lease (its criteria are a lot lower than they are when you take out a loan).
What to do before you buy a car?
- Think about your credit score: did you know that if you have perfect credit, you receive the lowest possible interest rates for your car?! This policy applies almost anywhere in the world, allowing good and safe drivers some amazing perks and benefits. Re-think your strategy and your payment history before you begin looking for your next vehicle.
- Refinance: did you know that cars depreciate rapidly, making it imperative that you pay off your loan quickly? You should consult with a banker on your financing options to see if you can afford a loan. See in which areas you can cut some corners and if it is possible to save up. Often times a lease is only a good option if you plan on switching through new cars quickly, having a difficult time committing to just one model.
- Go cheaper: why not go for an older pre-used model? Ask yourself if you really need a luxury car and if you can afford it. What is its purpose, to be functional or to get all the looks? Also, what type of a car are you looking for, since some are harder to find than others. Sooner or later you will realize that models that have been properly maintained are something to consider.
What are some other options to consider when it comes to getting a vehicle?
1. Cash it out
The cheapest and most simple way to buy a car is to fund all or part of it in cash, as you’d think, right? Well, not everyone has the luxury of having X amount on them. However, if you can cash it out, you get to be its rightful owner overnight. As a car owner, you can sell the car at any time if your circumstances change or you run into financial trouble. You won’t have to worry about any monthly settlements either. Cashing it out might be the best solution since you are in full control, you get to make new adjustments and you can sell it whenever or to whoever, possibly even making a profit if you do it just right.
2. Personal loan
If you can’t afford cash, a personal loan is usually the cheapest way to do it quickly and in a matter of a week or two. In most cases, you can spread the cost between one and seven years. This depends on your paycheck, your finances, your credit score, as well as the price tag of your chosen vehicle. Make sure the loan isn’t secured against your home, however, and be financially stable and reliable if you plan on doing it this way. There can be a lot of things at stake. The truth is that you can get a competitive fixed interest rate if you shop around.
3. Peer-to-peer loan
This is also known as social lending which allows people to borrow or lend from each other without banks or building societies being involved. This applies to your closest friends and family members, or you can turn to some sites that offer this option online. However, only go for reliable and checked-out sites when it comes to peer loans. You’ll still need a good credit score to get the best rate, and missing payments will also affect your credit rating, so be prepared for the process.
4. Used car finance deal
If you want to try out something different choosemycar.com is the right site for you! On there, you can get a used car at an affordable price hassle-free! Simply pick out a loan amount and a loan term that works for you! Applying for used car finance through them will allow you to walk into a car dealership just like you’re a cash buyer – knowing you’ll have the very best car finance deal in your pocket. Enjoy 6.6% APR + no fees. Check them out and have all of your questions answered through their skilled and trustworthy team.