Paul Watson
Few inventions have had as much influence on humanity as cars. The fact that you are reading this piece means that you are at the very least contemplating investing in a new automobile.
It does not matter if you are in the market for a new vehicle or your first vehicle; the processes are pretty much identical.
Today, we are not just talking about cars; we are also looking into how we can finance the purchase of your next vehicle.
That being said, here are a few ways to finance a vehicle purchase:
Factory Financing
Factory financing is one means of vehicle financing that is not very popular. The way factory or dealer financing works is similar to a car loan.
These loans are arranged by individual car dealers and underwritten by a third party financial institution or the car’s manufacturer.
Depending on the type of deal you negotiate, these loans may sometimes carry very little to no interest rate. Keep in mind, however, that this is usually tied to you paying more for the vehicle in the long term.
This is a means of vehicle financing that is worth looking into.
Leasing
Leasing vehicles is surprisingly popular among Australians. A lease is different from a car loan in the sense that the financial institution or lender retains ownership of the car.
They purchase the vehicle on your behalf and then lease it back to you. You will be required to pay a fixed monthly “rental” fee throughout your lease.
At the end of the lease, you can decide to pay a “residual value” final payment to enable you to take ownership of the vehicle. If that does not work for you, you can decide to trade the car in or refinance the residual if paying it off at once is not feasible.
Favourable Car Loan
A car loan is a straightforward option and it has to be among the most popular forms of financing vehicle purchases.
If you take on a car loan, the money is secured against the car, and more often than not, you can expect to pay your vehicle off at around the same rate your vehicle depreciates.
Getting a loan is easier said than done for those with an imperfect lending history, so what you need is a lender who’s willing to finance your vehicle purchase even with a bad credit rating.
Saving
If you are serious about purchasing a vehicle, your first option should involve saving enough money to either pay for it outright or pay a percentage of the total cost of the purchase.
If you’re in your early-to-mid-twenties, you do not want to take on the full burden of financing a car for the next five or so years as you will probably have other bills to pay and the last thing you want is to overstretch your finances. Saving and paying a part of the vehicle upfront may be your best option.
Pay For Miscellaneous Fees
When purchasing a vehicle, especially when it is your first car, what you want to do is pay for expenses, taxes, and other various charges upfront.
Avoid financing the extra charges involved in your automobile purchase. Car dealers are more than happy to roll as much of the additional fees into your financing plan.
By financing these extra fees, you will be more willing and able to purchase whatever additional insurance or extended warranties your dealer offers you.
