If you need a car immediately, you don’t have to wait until you have enough savings or even a partial amount of the full price. You can immediately drive off with a new car in a few hours, right after the car dealer has approved documents and paperwork. If you find that the monthly finance repayments are within your budget, car finance deals are a sensible option.
If you require a car for your business and you end up borrowing money to get the company car, the finance cost for repayments is tax-deductible. Consult with your accountant about possible benefits and savings you can have when you opt for car finance deals.
Spend the cash on other core investments.
Spending a massive sum of money at once for a car isn’t always a good idea, especially if you need cash for your business, family, as well as personal needs. It would help if you had money in hand for emergency expenses such as medical bills and unexpected business expenditures.
Establish your credit
When you pay your car loan payments on time, you can establish a good financial track record and create good credit standing. It is useful for your future endeavours, especially if you need financing for a mortgage or business.
Car finance options: an overview
If you have opted for car financing, there are different factors to consider. The following is an overview of each type to help you select the best one.
- Personal loan
Personal loans require you to make monthly set payments, which include interest. Typically, payments will stretch for up to five years. Loans can either be secured or unsecured. Unsecured personal loans have higher interest. You need up to seven years to repay it.
- Credit card
If you want to have more cash for your car purchase, you may want to utilize your credit card to pay off some of it, especially if your card offers low rates. Some institutions offer credit cards with a 0% interest rate for up to two years.
- Finance lease
This option allows you to rent a car for an agreed period instead of buying it. You pay a specified rental amount plus the interest rate. You cover maintenance and repairs as well. Some leases will include an option to purchase once the lease ends.
- Hire purchase
In this case, you pay the agreed deposit plus an additional monthly hire payment. The business utilizes the car for a certain period. Once it ends, there is a transfer of ownership after the final payment.
- Chattel mortgage
You get a loan from a lender to purchase a car. You will own the vehicle from day one. This type of loan is secured, so the interest rates are much lower compared to an unsecured loan.
It is crucial to invest in a vehicle such as a car, especially if you are running a business. But paying cash upfront can be a severe blow to your bank account. Although you have the money, it may not be ideal, bringing it all to the table. It is a wise move to hold onto your cash as much as possible. There are plenty of options for a new car, such as loans and leases, that only require small regular payments.