A variety of car finance products are available to finance a car. In most cases, you have to make an initial deposit and pay some fees to get the loan amount. Once the loan has been released, you can use that amount to purchase your car. From now onward, you have to make monthly repayments to clear the loan. Use this financing option to avoid paying the high cost of a car initially. The cost is spread over several months or years, making it easy to purchase an expensive item like a car. Shop around to find the best finance deal.
Different Borrowing Options
You are not limited to only the car loan whereas you repay the loan amount gradually to clear the loan and remain the owner of the car. You also have the option of hire purchase agreement whereas you will not become the owner of the car outright but will own it at the end of the agreement. Under this plan, you can use the car as you wish from the start. At the same time, you have to keep clearing the loan amount as agreed under the term of the hire purchase. A few other car finance options are also available. Explore these options to choose the one that best works for you. Hire purchase like borrowing option is used mostly by the commercial transport operators.
Differences between These Different Plans
Under the hire purchase agreement, you do not become the owner of the car until you have repaid the full borrowed amount. The car belongs to the lender until the final payment has been made. You become the owner after this final payment is paid. You have to pay about 10% of the car value as deposit initially. Monthly payments are lower for the higher deposit. A car loan where you become the owner outright is used most to purchase a personal vehicle. It can be a secured or unsecured loan based on your borrowing preferences, credit record and repaying capacity. You are covered under the loan term the day you receive the loan amount in your bank account.
Compare Car Loans before Borrowing
All loans are not same. Some loans give you better terms and conditions than the others. You will be paying lower interest rate. It can be a significant saving when you calculate the amount you save over the loan term. Visit a car loan comparison website that makes it easy to compare such loans quickly. Provide details about your car finance requirements and it will show you the loans matching your criteria. If you provide your contact details, you will also receive calls from the lenders who are ready to give you the car loan.
First decide the car you plan to purchase. This will make it easy to choose the right car finance product.