Banks and financing agencies make it easier for everyone by introducing a car finance or instalment plan where the customer has to pay the agreed amount in instalments over an agreed period of time. The first payment which is called the down payment is a bit higher but after that, the instalments are very easy. It varies from car to car and model to model. Therefore, it is much better to consult the car financing agent who can brief you about how the financing of car works.
Analysing your circumstances for car finance
Even if you have the cash to buy a new car, still you have to consider a few important things before taking this critical decision. Following are some of the key points that will help you in making a decision to do car finance in Perth:
- If the money you set aside for buying your car generates more interest by financing that money, then you could earn more if you kept that money in some savings account or have it invested somewhere else.
- If you have a poor credit rating, then obviously you have to pay more interest on car finance. In such circumstances, it is better to buy a car on cash.
- You can also choose to buy a car on cash if you are highly indebted and don’t want the car financing to further damage your credit rating.
Sources of Car Finance
Following are some of the most common sources of car finance:
- Dealership – It is the most convenient, fast and reliable financing source for the car. It is not always competitive and generates high pressure in the initial payments of the loan.
- Credit Union or a Bank – It is the widely used source of car financing. It allows customers to get personal service with very competitive rates. This financing can also provide you with cost-free life insurance or any disability insurance. On the other hand, this financing source is not much flexible, and it is not as convenient as the dealership source.
- Online Financial Institution – It is the quickest, easiest and usually the most competitive source of car finance. On the contrary, a lot of scams have also been reported in this car financing source, and it is also not a personal service. Customers should be extremely cautious as they have to deal with unknown people.
- Home Equity Loan – The home equity loan source works by deducting a portion of your interest from taxes. They normally offer very competitive rates. It can be a risky source as well as you are actually tying your car to your home.