When you are about to buy a car, the first question that comes to your mind is how you are going to finance it. Many possibilities are available to you, either you pay for your car in cash, or you opt to take out financing.
Who should you purchase financing from?
Several choices are available to you, you can go directly through your bank, through the manufacturer himself or even through a third party. It’s good to check with everyone to see the best financing options available to you.
Agencies like MAAF’s also offer car financing, if you are insured with them then you can inquire and see if you can make a package. By going through your bank, you can play on the rate applied and try to negotiate. Regarding manufacturers, there is often still room for maneuver for negotiations. It’s up to you to decide in which of these points it will be the most advantageous for you.
Possible financing for the purchase of a car
It is necessary to choose a financing adapted to your needs, if you ride a lot you will not subscribe to the same products. And you may even have the option of financing your vehicle for cash.
Opted for cash purchase
If you can afford to go through this solution, this is definitely the best choice. Indeed, you will not be obliged to take out a loan and therefore have additional costs. However, one must take into account the loss of its future value, a car loses on average 25% of its initial value.
Opted for purchase on credit
Buying on credit requires knowing the monthly payments that the borrower is ready to provide monthly. There are two types of credit, consumer or affected, generally it is the second that is the most common, because it is triggered that the validation of the purchase of the car. If for one reason or another the purchase will not be made then the credit will not be issued.
Opted for a LOA (Rental With Purchase Option)
Also known as leasing, this system consists of renting a car by paying monthly rent to the organization where you have taken out the contract. The amount of this rent varies according to many points, the value of the vehicle, the duration of the financing, the various guarantees chosen, but also the defined kilometer.
Generally the mileage is between 15,000 and 25,000 km for a diesel, if it is exceeded, there will then be payment penalties. This type of financing is best for people who do not plan to travel a lot of kilometers.
Opted for an LDD (Long Term Rental)
This means renting a car, this time for a period defined in advance. During this period, you will be subject to limited mileage. The points that determine the amount of rent are similar to those of an LOA. Once you reach the end of this contract, you will be offered a new rental, either you will extend it, or you can return the vehicle and leave on the rental of another.
Opted for balloon credit
The rental period and the redemption price and determined from the start, the maximum period for this type of credit is 4 years. It is also possible to make a contribution ranging from 5 to 20% of the amount of the vehicle. With this type of contract, it is not a rent that you pay, but an amount that you repay. By making a contribution, the monthly payments will be lower and you simply pay the interest on your loan.
At the end of this contract, you will be able to change vehicle and start again on a new loan, renew your lease or sell the car himself and thus repay the initial loan. But if none of these options suit you, then you can buy back the vehicle, at the value set in the contract.
So you have learned about all the possible options for financing your car. It is up to you to take into account the various points above, but also to know your needs, so as not to have any surprises when the financing ends.