Buying a new car is a decision that we often delay for years. All because it is a huge expense. However, if it is required by our living situation or our old car simply ceases to be safe or profitable to maintain – it’s time to buy a newer vehicle. How to deal with the lack of funds to buy a car? What type of financing is best to decide?
A new or used car?
The old car begins to fail more and more often, and winter impresses with rust on it. Expanding the family is associated with the need to have a larger vehicle. There are many reasons why we decide to replace the car . Unfortunately, this decision is often stopped by financial factors. Buying a car straight from the salon is a big expense, we will also pay a lot for third party insurance .
That is why many of us decide to take advantage of the aftermarket and buy a used car . This generates a lot of savings, but it requires a little more effort from us: if you buy a used car, you should check the source and the car itself. In this situation, it is necessary to thoroughly review the car for which we want to decide. Particular care should be taken in the case of vehicles imported from abroad.
Car loan – what is it about?
A car loan is a special-purpose loan . This means that we cannot spend the money borrowed in this way for any purpose . The purpose of the loan is strictly specified in the loan agreement and concerns the purchase of a specific good, i.e. in this case a car.
The car for which we take such a loan appears in the contract as collateral . Thanks to this, we can count on a relatively low installment. In the case of such a financial liability, however, it is necessary to take out AC insurance .
The lender also often requires a down payment . For some loans, this is not necessary, but it allows you to significantly reduce the interest rate and commission.
This type of solution is associated with new cars, but you can also finance the purchase of a used car . It also doesn’t matter if we buy the car in the showroom, on the commission or on the stock exchange. A car loan can also be taken for a car imported from abroad.
What to look for when choosing a car loan?
The first thing we should pay attention to are the costs associated with making the commitment .
The cost of the loan consists of many factors: the amount of interest and any commission, any additional fees and the monthly installment generated on this basis. Sometimes banks require us to buy additional products , such as credit insurance.
Car loan comparator will help us in comparing the bank offers with each other. We can also ask the bank for an example of calculating the installment including all fees.
In addition to costs, we should pay attention to all provisions in the contract regarding the requirements for the borrower . Let’s check whether the bank requires us to buy additional banking products, such as life insurance . The bank may also require additional security for loan repayment, such as assignment of rights from the AC policy or establishment of a repayment guarantee.