If you have seen a car you like and feel that you need and want to have it, the next logical step is to buy it. If you are lucky enough to have the full asking price of the car to hand, then you can buy it outright for cash. Most of us though, are not that fortunate and do need to take out a car loan to get the car we desire.
What influences the decision to take out a car loan?
In such cases and depending on the condition of the car, a car loan quite possibly will be a fine idea but choosing the right type of car loan will determine if the purchase is value for money. Taking out a car loan is a liability and there exists a responsibility to meet monthly repayments. To buy a car with a loan, a person should be able to afford the monthly repayments.
Lenders will wish to confirm that a person is able to afford a car loan and will require various documents as proof, such as for income, existing liabilities or debts, identity, resident address and so on. The details of the car and who the vehicle is being purchased from may play a role too, particularly if the agreement is a personal contract purchase (PCP) or hire purchase (HP).
Taking out a car loan requires commitment to the loan duration term. A person should feel confident that they will be able to achieve the term of the loan. It may be better to delay making a car loan application if a potential move abroad is on the cards in the near future or if job termination is likely. If the time is right to take out a car loan, then the type of car loan will need consideration.
What type of car loan will be right for me?
A car may be purchased through a number of loan types including:
- Money borrowed from family or friends
- A bank loan that is secured, unsecured or guaranteed
- Personal contract purchase (PHP) agreement
- Hire purchase (HP) agreement
Borrowing money from family or friends may work out the more economical option. However, relationships are at stake if money cannot be paid back. A family member or friend may however step in as guarantor for a bank loan in the event that you own no assets to secure a loan and credit-worthiness is weak.
Should you own assets, such as property, a secured bank loan may be the better choice. Secured bank loans have the benefits of a lower interest rate and monthly repayments, more choice in loan amount and duration, and less fees or charges. The asset you own serves as security in event of default on the loan, meaning that the bank may then claim on the asset to retrieve the monies you owe them.
An unsecured loan comes without these benefits, translating to higher interest rates and monthly repayment amounts. There is not as much choice in the loan amount and it may be substantially less with shorter repayment duration. The fees and charges associated with the unsecured loan may be higher too. It is worth shopping around and comparing what lenders have to offer so that money may be saved over the longer term.
With a PHP agreement, from a person pays an initial deposit and based on this deposit amount the lease monthly repayments are calculated. The car may then be purchased at the ending of the fixed term agreed through payment of another lump sum. If this payment is not made, the car is returned without ownership. Some PHP agreements may include charges if mileage is exceeded and car maintenance costs. Alternatively, a car may be purchased through HP where monthly payments are spread over a set term with or without payment of a deposit.
Ryan Newman 39 Army Quicken Loans Hat Credential Holders Lanyard 1:64 Car SS Lot
US $10.00 (0 Bid)
Auction Ends: Thursday Jul-24-2014 9:28:52 PDT
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