Auto finance also called car finance comprises the financial products that allow people to acquire a vehicle with different arrangement lump payment at once. Auto finance is required by both businesses and individuals.
There are different ways of obtaining auto financing. Different products types of auto finance are available to different sectors and it is of great important to know and evaluate their requirements, benefits and conditions before making a decision.
The following are the best auto finance offers for a new car.
Personal loan- it is the most common type of auto financing. It allows one to borrow loan from his or her chosen lender. In addition, it makes it easier for the buyer to pay entirely for the car. This result to the buyer owning the car entirely.
- Personal loan in financing a car gives the owner the freedom to dispose the car or trade for another car at will because the car debt is paid -off through personal loan.
- In comparing the best offer from the financial institutions, go for the institution with the lowest annual percentage rate (APR).It may be tempting to go for long term periods but this may result to paying of high interest. It is recommended you go for the loan with a short loan term.
Hire purchase- after the personal loan, hire purchase is the best finance offer to purchase your car. Under the hire purchase agreement, you are required to deposit and in most cases it is ten percent and after that you are required to pay monthly payments that are fixed.
- Under the hire purchase type of auto financing, the hire purchase company owns the car until you pay the final payment.
- Until you finish all payments, you do not have any legal rights on the vehicle like disposing it or exchange. In most cases, the car is considered as the collateral.
Personal Contract Purchase– it is considered as the second most popular auto finance method.
It is similar to hire purchase in that there is a deposit to pay, monthly repayments and a fixed interest rate over the loan term. In most cases the term is between twelve and thirty six months.
The differences with the hire purchase are that at the end of the term, you will have the following choices.
- You keep the vehicle
- You can return the vehicle to the supplier
- Or you can trade the vehicle for a replacement
- In the option of returning the car, it costs nothing.
Personal contract hire- this involves hiring the car for three or two years with an agreed limit of mileage. You are not given the option of buying the car after the contract end. You are held responsible for the car upkeep when you are running it.
Self finance- this involve buying a car from your own cash or savings. You don’t have to pay interest and you have all the legal rights on the vehicle.
Driver and Vehicle Licensing Agency – DVLA – is responsible for drivers and vehicles database maintenance in Great Britain. It issues driving licenses and also sellsDVLA number plate.