If you have tried buying a car, you understand it’s not an easy decision to make. From the various options like buying altogether to using finance options, the choices are endless. However, since buying a car is a significant milestone in your life, you should carefully choose the best options available.
For a young person, saving for a car is difficult; nonetheless, the following options will help you secure one.
Loans are a convenient means to finance a car. There are two types of loans that are suitable for you as a young person. Car loans and personal loans.
Purchasing a car through personal loans is the most convenient form of financing a new vehicle. However, it might be expensive compared to other finance options. For this reason, you should compare annual percentage rates (APR) for various loan lenders first.
The additional advantage of personal loans is, you can finance both new and used cars which are less than 10years old. You can make use of the money for other additional expenses. Car loans are also the right means to finance a car, check out car loans Canada to learn more about it.
- Hire Purchase Option
Hire purchase is another option to finance a car. You’ll need to make a down payment of usually around 10% and monthly charges for a while. Hire purchases are convenient because car dealers arrange them.
Though this might seem like the right option, you can’t own the car until you have made that last payment. It also means you can’t sell the vehicle if you wish.
- Personal Contract Purchase
Though personal contract purchase is similar to hire purchase in terms of paying a deposit, you will pay lower monthly charges. In PCP, you will get a loan based on the financing company’s prediction of the value lost throughout the deal. Therefore, unlike hire purchase, you won’t own the car at the end of the contract. It also means you will have three options to make:
- Making the final payment for the vehicle. You can opt to keep the car by making the balloon payment.
- Pay nothing and hand the car over to the dealer.
- Trade-in for a new vehicle and start the whole process again. At the end of the contract, the car will be somewhat worth more than the balloon payment, which means you can use the difference as a deposit for a new car.
Though through leasing you don’t own the car, it is an excellent way to finance it. You will set the terms with the dealer of how long you wish to lease the vehicle. You will also pay fixed, regular charges to the dealer. The costs will include all the servicing and car maintenance fees. Besides having flexible payments, you won’t have to worry about the vehicle depreciating in value
- Credit Card Payment
You can also finance a car through the use of a credit card. However, you should consider this option carefully before going ahead with it. Using a credit card will depend on whether the dealer is willing to accept it as a form of payment and whether your credit card limit can cover part of the purchase. From there, you can go ahead to make the purchase. Nonetheless, it would be wise to consider whether you can get the money to pay the balance.
Buying your first car is not easy for a young person though it is possible. If you carefully think of the best finance option, you will happily drive off into the sunset.