Few people can buy a car paying with cash. That is why most people finance their vehicles. There are different options to do it; your duty is to analyze them and your finances to see which one is better for you compared to your needs. Here are five ways to finance the purchase of your car.
1. Get a personal loan from a financial institution. This is the most common option. The interest and total cost vary depending on the entity with which you make the contract and your credit history. Be careful when using this option, often assets and property are used as collateral to guarantee payback of these loans, which places your possessions at risk.
2. Family or friendship loan. This is a more secure option than using a financial institution. It is important to discuss the loan amount in detail and put everything in writing to avoid problems in the future. This turns out to be a good option if it is someone you trust, since you will have more time to return the money, and the interests may be lower, or even nonexistent. The only negative thing about this option is that you can put the relationship at risk.
3. Purchase in installments. When buying in installments, you sign a contract with the seller where you agree to buy a vehicle within a specific timeframe. You have the option of using the vehicle while paying fixed monthly installments until you pay the full price. You will be registered as the driver and person responsible for the vehicle, but you will not be the owner until after you finish the payments. Compared with flexible financing, you will end up paying more in the long term since the interest rate will be higher.
4. Flexible financing. Car agencies offer a flexible payment plan. It is similar to the purchase in installments, but with some differences. Contrary to the previous option, once you finish the payments, you decide to keep the car, return it without obligation or exchange it for another model that is of the same brand, and pay the difference. Occasionally, you could negotiate a discount for the other model. This option, most of the time, offers some models chosen by the brand, and not all cars available in the agency.
5. Savings. It is not necessary to get involved in any debt or financial agreement if you have some money saved. Savings can stem from an inheritance, selling an old vehicle, or other means of savings. Saving up for the purchase, you will not depend on anyone else, nor will you have to pay interest. This is the most economical and stress-free option and is ideal if you can accomplish it.
Whichever option you choose, buying a car is an important life decision. To avoid paying too much and accruing debt, make wise financing choices.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.