With savings in the bank for those unexpected car repairs it seems that paying cash is the best and cheapest ways to purchase a car.
Why is paying with cash better?
If you pay with cash, then you actually own the car outright. There are no financial obligations to meet and no difficulty in selling the car.If you purchase via a personal contract this means that the financial company will own the vehicle throughout the entire contract.During this time you cannot sell the car even if you are struggling with the repayments. The repayments are mandatory, and they can last for several years.
Interest rates are always all over the place and can reach significantly high, this is where you can run into some trouble with your finances. Buying outright with cash avoids the interest rate saga in all directions.Sometimes you might not have enough money saved for a car, but you desperately need a car. Did you know you can put down your savings as a deposit and then use the remaining amount as a loan that way the amount is less meaning the interest is less.If you choose not to go with cash, then car finance or credit will be the other options when purchasing a car.You may be limited to using credit or car finance if your credit score is bad or you don’t have any credit history at all.
The catch people tend to get into with credit is they get offered a large amount of money and they accept without even thinking about whether they can afford the repayments and how long the repayments will actually run for.
If you do happen to fall behind in the repayments call the company as soon as you can and most are happy to work out something to help your situation. Some may lower your repayments but make them last longer or put a hold on the repayments for a little while.Sometimes you can return the car, but you will lose some money,but this is possible if your finance company allows it.
A personal loan offers no money upfront and gives you theopportunity to buy a car and spread the repayments over a period of time.Personal loans are quick for approved customers but you do end up paying fees at the end of the course that can be quite significantly high.
Shop around for loans that are low in interest and offer the ability for flexible payments so if you have some extra cash this week put it onto the loan this can lower it quicker than the term given.
If you aren’t sure which way is best for your personal situation then you could always talk to a financial advisor who can advise what would work best for you and the company that are best to go through. A financial advisor can also put you through to a broker who can find you the best deal.