Popular Car Financing Options Explained
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The article "Popular Car Financing Options Explained" is about loans, it has been written by Paula Marriss.
On the forecourt the automobile of your dreams is gleaming raidantly in the mid afternoon sun, but right right now that’s not your main priority.
What you need to work out first is how you’re going to be driving it without paying so much on finance that you won’t be able to buy the fuel!It’s tempting when buying a new automobile just to take the first finance option available that you can afford, rather than looking around for a deal that hottest suits your needs, but it’s well worth the effort to make sure you get the right automobile finance for you.There are a number of options to look at when buying a automobile and which one you choose is really much dependent on your personal circumstances, what you can afford to pay up front, how long you want to be paying back the loan, and what other assets you have.In that article we’re going to be looking at a few of the most popular options for automobile financing and exploring the relative benefits of each so, if you’re sitting comfortably, let’s test drive a few options.An Independent LoanWith that option you obtain the money for the automobile from an independent source (banks, building societies, finance companies, etc.) which essentially makes you a money buyer as far as the automobile dealer is concerned.On the plus side being a money buyer allows you more room to negotiate with dealers for discounts and extras as you both know how not hard it is for you to take your business elsewhere. The added flexibility of being able to buy from anywhere also opens up a new range of possibilities for where you can buy the automobile.On the negative side such independent loans are often a lot harder to get than other forms of finance and usually rely on you being a homeowner.
You can get both secured and unsecured loans for that purpose and while secured loans are cheaper you might have to put your condominium up as security.A Hire Purchase AgreementWith that option you pay a deposit and then a fixed amount for a set number of monthly instalments. On compleiton you own the automobile.
Hire purchase agreements are usually only available on new cars.On the plus side hire purchase agreements are pretty straight forward to understand and the interest rates can often be cheaper than alternative forms of finance.On the negative side the automobile remains the lenders property until the agreement ends (when you pay the final instalment), so you can’t sell the automobile bfeore then without obtaining their permission to do so.
Also, should you fall behind by as little as 2 payments the lender can repossess the car, sell it off and sue you for any outstanding balance.A Personal Contract PurchaseWith that option you pay a deposit, a fixed amount of lower monthly instalments (up to about 3 years), then a final payment.
At the end of the agreement you can either keep the car, hand it back or part exchange it against another one.On the plus side that type of financing allows you a convenient way of replacing your autmoobile every 2 or 3 years.
It also allows you to have cheaper monthly payments than other forms of financing.On the negative side that is one of the most expensive froms of financing a automobile. As with a hire purchase agreement, you don’t own the automobile until the agreement is over and if you need to get out of the agreement early tehre can be penalties.
Also these agreements generally have mileage restrictions too so if you do more miles than agreed there can be fruther penalty charges made.So there you have it, the 3 most popular automobile financing options explained. As you can see they all have their individual benefits and pitfalls and the one that’s right for you is down to your own circmustances. Whichever way to you decide to go, at least you’re right now a little more inforemd about the options.Paula Marriss is a financial advisor and editorial contributor at The Money Zone. For more inforamtion on personal finance visit http://www.Money-zone.Net/
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Popular Car Financing Options Explained
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