How to choose a car finance company
by mike cash
When purchasing a car what are a few points you need to consider? Well, you first need to finalize the model of the car you wish to purchase keeping in preview the budget you have set aside for it. Next, you need to locate the car dealer who gives you the best possible deal, pay them the money and purchase the car. However, this entire process is not is more simpler said than done.
Not all the people who wish to purchase the car have the entire amount needed for this purpose. Most of the car buyers these days depend on a credit facility to purchase their dream vehicle. However, before taking a car loan you need to take certain points in consideration and ensure that you do not pay any extra amount than what is required.
First and foremost, it is always beneficial to carry out proper research and do a comparison of the rate of interest being charged by various car finance companies before finalizing the one that suits you the most.
You may often receive lucrative offers from car dealers who offer different types of car loans. This is basically in their interest too as each car dealer receives a fixed amount of commission from the car finance company, which can be as much as 4% more than the cheapest car loans available. However, paying extra interest makes a big impact on the buyer’s budget, especially because the tenure of the car loan is mostly for several years. And, therefore any extra payment that the buyer needs to make may cost them thousands of dollars more.
Remember to opt for a car loan only when it is absolutely essential. Rather, try and arrange for your own funds before purchasing a car to get the best bargains and deals. This not only helps in increasing the overall bargaining power of the buyer helping them get the true value for their money.
Also, when selecting the best car finance plan don’t forget to consider the amount of depreciation chargeable on the car you wish to purchase. Remember, depreciation is a non cash reserve that reduces the value of the vehicle on account of its usage and wear and tear. This amount is much higher in case of certain cars and can reduce its value by half in the first year and two thirds in the next three years.
It is therefore, in most cases, beneficial for the buyer to select a personal contract purchase plan, also known as PCP. In the plan, which is similar to the hire purchase agreement, a conditional sale agreement is decided between the car finance company and the buyer. The company makes equal monthly installments spreading across the entire lone tenure, which the buyer agrees to pay. The buyer can also choose to terminate the contract by paying a consolidated amount to the financer in the middle of the contract, and thereby own the vehicle. In case of any failure, on the other hand, the car finance company may take back the car from the buyer. This leads to reducing the effect of the depreciation impact thus faced.
CNBC’s Squawk Box with Joe Kernen, Becky Quick and Carl Quintanilla, Sept 10, 2009. From Meredith Whitney’s website. www.meredithwhitneyllc.com Meredith Whitney is the CEO of Meredith Whitney Advisory Group, LLC, a macro and strategy-driven investment research firm. In 2009, Ms. Whitney was named as one of Time Magazines list of 100 Worlds Most Influential People and was ranked the #1 Investment Analyst in her category by The Wall Street Journal. In 2008, Ms. Whitney was named one of Fortunes Top 50 Most Powerful Women, The Wall Street Journals 50 Women to Watch, Smart Moneys Power 30, and Crains 40 Under 40. Ms. Whitney was also ranked in Institutional Investors 2008 All American Research Team. Well followed for her core research, Ms Whitney and her team also focus on a broad section of financials including large, small, and mid-size banks, brokers, independent commercial and consumer finance companies. Prior to founding Meredith Whitney Advisory Group, Ms. Whitney was a Managing Director and Senior Financial Institutions Analyst for Oppenheimer & Co. Inc. Throughout her tenure at Oppenheimer, Meredith was most noted for her research on the ultimate decline in home prices, the future of the US mortgage industry, and the consumer lending market, including specific focus on the credit card industry. In 2007, she wrote prolifically on the threats surrounding the weighted influence of the rating agencies on regulatory capital determinants and the risks of the monoline …
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