The A-Z of Car Finance
It is easy to be tempted by dealer finance that looks fantastic, but in reality comes with more hidden charges and fees than you bargained for. Organise your finance before you go car-hunting to ensure you’re getting the best deal on your car finance. Often when people think of car finance, people assume car loans through dealerships or banks are their only options – but there are many others.
Choosing the right car finance for your situation will save you a lot of hassle down the track, as well as make you great savings! There are many factors to consider such as which features will best suit your needs, and whether the car will be used mostly for business or leisure.
The following list is a starting point for learning about car finance, and it is important you consider your personal circumstances when deciding on a method of car finance. A Naritas finance consultant will be able to help you with this too.
This is what most people think of when looking to finance a new car. A traditional car loan is when a financier advances you funds to purchase a car, giving you ownership of the car as soon as you purchase it, and the financier takes an interest in the car as security for the loan. At the completion of the contract, the financier no longer has interest in the car, leaving you with clear title.
Car Loans generally have flexible terms, with a choice of fixed or variable interest rates, and the loan is secured against the car which allows for lower interest rates.
When using a personal loan to finance your new car, the financier will advance funds to you and take ownership of the car at the time of purchase. You proceed to repay the loan to the financier over the agreed terms. The difference between this and a car loan is that the financier doesn’t hold the vehicle as security for the loan; they do however have ownership of the car until your loan is fully repaid.
Personal loans are offered with flexible terms usually from 1 to 10 years and with fixed or variable interest rates. As the loan is not secured, interest rates are generally higher than with other forms of finance.
This is also referred to as an Asset Lease or Vehicle Lease, and is generally used by businesses or sole traders where you have access to the car or commercial vehicle as if it were yours, but the financier keeps ownership of the car.
This type of lease has many benefits, including read more…