Car Loan – What are the Options?

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Nowadays, the car is no longer a luxury, it is a necessity and therefore almost everyone has it. Hundreds of thousands of people use the car daily on their way to work. It is therefore important to take care of it regularly and ensure that it is technically sound. If the condition of the car is at a stage where it is not worth investing in its repair and maintenance or has hundreds of thousands of kilometers driven, it will be time to buy a new car. You can buy it in cash, or you may need another source of financing, such as a loan.

Loan for a new or used car?

Loan for a new or used car?

Many people face the dilemma of buying a new car or a used one before buying a new car. Buying a new car is a matter of hundreds of thousands of crowns. Although people usually have a financial reserve, they do not want to give up for one thing. Or they have deferred money, which is not enough to fulfill the dream of a new car and you need a car loan. In such a situation, you have three options to finance your car.

1. Leasing

1. Leasing

Once a very popular option to get a new car is leasing. The main minus is that the vehicle is the property of the leasing company until it is paid in full. There is no early repayment option for this funding option. Compared to the classic car loan, interest rates are higher because they include both compulsory and accident insurance. Often the applicant has to make a so-called down payment, which is part of the car price that the leasing company will require to pay in advance. The plus of leasing is the easy settlement that will solve the leasing company for you and that the entrepreneurs can deduct the installments in the tax return. Leasing is also readily available as it does not examine the buyer’s financial situation.

2. Non-purpose consumer credit

2. Non-purpose consumer credit

Financing a new or used car is also possible thanks to a loan. You can choose a regular consumer loan for anything. However, the most optimal option is a specialized car loan, where you can expect better interest rates. It has several advantages. When you sign a contract, you set your car on fire and you immediately become the owner of the car. Car loans tend to have better rates than leasing, and you can sell the car at any time and pay the loan at the bank. However, you will be more worried about arranging a loan because the bank will check your creditworthiness. Although it is not such a problem, because your car will serve as a pledge. The longer duration of the entire loan process will be a downside.

3. Operational leasing.

3. Operational leasing.

The so-called operational leasing is increasing in popularity, when you do not finance your own car but rent it for a certain period of time and pay the set monthly rent, which includes both compulsory and accident insurance. The car is the fixed assets of the leasing company and will be returned to the company after the end of the contract. The main advantages of this lease are low monthly payments and the option to repurchase at the residual price after the contract expires. People do not use this possibility much, because they prefer to buy one of the new cars in this form. In the case of operating leasing, you do not need a down payment, you do not deal with the subsequent sale of a car or service or repairs.

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