What are the three most common ways to finance a car?
All drivers should consider purchasing a new car at some point in their lives, whether it’s planned or unexpected. You may be driving a car you’ve owned for 10 years and have decided it’s time to upgrade to something more reliable and affordable, your current car may have broken down and it’s not economically feasible to repair, or you may just be tired of drive the car you have right now. While there will certainly come a time when everyone needs to buy a new car, the problem comes when people start looking at how they are going to pay for the car.
Some people will have no problem walking into any car dealership in the country, buying any model they like and driving it for cash. Others will not be so lucky and will have to calculate how much they can realistically afford and stick to a strict budget where they cannot spend a dime.
Fortunately for those people who don’t fall into the first category, which is in fact about 80% of the ‘new’ car buying market, there are several options available for you to consider when shopping for a car. Here are the top three auto financing options open to the 80% of people who can’t buy a car with cash.
1. Car Leasing – This is now the most popular way for UK drivers to get a car. Installment buying used to be by far the most popular, but the lure of low monthly lease payments, returning the car to the leasing company after 3 or 4 years (instead of the stress of selling it), and buying a new car, they have changed car leasing. to first place with c. 60% of all car buyers used this option in the first half of 2010. Car leasing is also popular because it makes more expensive cars more affordable. This is because more expensive cars (eg BMW, Mercedes) depreciate slowly and when you lease a car you finance the vehicle depreciation plus interest and you do not pay for the entire vehicle, only the amount agreed upon with the leasing company. you at the beginning of the contract. This means you can pay up to 50% less per month for a car lease instead of using an installment purchase or a car loan.
2. Purchase rental – used to be the most popular form of car financing. It is very basic. You sign a contract to buy the car by making monthly payments over an agreed period (usually 4 or 5 years). You will not own the car until you make the final payment, and if you default on your payments, the finance company will take the car from you because you own it.
3. Bank loans: Car loans are the least popular way to finance a new car purchase (only 13% of people use car loans to buy a new car). This is most likely because a car loan is the most expensive way to finance a car.