Car finance has become popular nowadays. A huge number of car buyers across the world have resorted to purchasing vehicles on finance of some kind. For instance, a person can decide to use bank loans, dealership, and leases among other forms of finance. The reason as to why car finance has become popular is obvious. A couple of years ago, before different economies experienced recessions, cars were cheap and buyers could even obtain good cars for as low as 5000 pounds. 5000 pounds is just an average figure since there were some cars that could cost far much less than that. Nowadays, the same 5000 pounds is more likely to be used as an installment on a car since prices have gone up. Considering the fact that salaries and other forms of income have stagnated, instead of spending a whopping 15000 pounds on a car, a person would rather pay in friendly installments of say 3000 pounds depending on the arrangements.
The appeal of car finance is straightforward, buyers can buy their dream cars regardless of whether they have full amounts or not.
Car/vehicle finance options
There are different types of car finance in northern Ireland that are at the disposal of car buyers. These options have different terms and conditions and it is of essence to understand the terms. A person who understands the terms as well as the policies involved in obtaining finance are most likely to reap the benefits of the finance. On the other hand, failure to understand what the arrangement entails may result in frustrations. The following types of vehicle finances are common:
1. Hire purchase
This is one of the most straightforward methods of buying cars. Under this arrangement, the buyer is required to place a deposit then make monthly installments on the car until he/she pays of the cost of the car plus the interest. The ownership of the car transfers to the buyer on payment of the last installment. Hire purchase is the most easily available form of finance. There are no requirements that are involved.
2. Personal contract purchase
This form of car finance share almost similar characteristics with hire purchase. Just like in Hire purchase, the buyer pays a deposit and then pays the balance in monthly installments. The only difference is that unlike hire purchase, the monthly payments are lower. Some arrangements also give the buyer a shorter term to pay the monthly installments.
3. Dealership finance
It is another popular type of finance especially among those who have poor credit history. In this program, the buyer sits down with the seller and comes up with a plan on how the buyer will pay for the car.
4. Lease purchase
This type of finance employs the characteristics of both hire purchase and personal contract purchase. The buyer deposits and repays the balance in low monthly installments just as in personal contract purchase. The main unique feature under the lease finance is that the buyer is required to pay a large final payment at the end of the repayment/agreement.
Pros of car finance
1) Buyers avoid tying up their finances on cars
Nowadays, cars have become expensive assets that people cannot afford to invest all their finances on at the expense of other things. Car finance therefore gives buyers an opportunity to buy cars without directing their entire finances on the vehicles.
2) Buyers get the chance to pay taxes on the monthly payment
Taxes increase the cost of the vehicle. Payment of taxes in installments is much easier than paying up front on the full price of the vehicle.
3) Possibility to change cars more often
Since fewer finances are required before a person can drive a car, people have a chance to drive the cars of their choice.
Vehicle finances are expensive in the long run. At the end of the payment periods, buyers will have paid the for the cash price of the cars plus interests.
II. Possible repossession
This is a serious issue in these types of finance. Buyers who fail to honor the agreements risk losing their cars including the already paid amounts.
III. Insurance considerations
Buyers should be aware of the above disadvantages before they can enter into any contract. It is also important to understand the policies of the financer so that you cannot fall into traps those results from ignorance of policies. All in all, vehicle finance ranks the best avenue that car enthusiast can use if they want to drive their dream cars.