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Ivan Dimitrijevic

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Car Finance - Personal and Business Options
By: Ivan Dimitrijevic   |    January 2, 2013   |   0 Comments (1) (0)

Car is the basic means of transportation nowadays. Many people around the globe are in constant need of those. Some of them want a new car to show off, some people need them to pick up their children from school, or get faster to their workplace, and others require them for their business accomplishments.

There are numerous reasons why anyone would need a car. This kind of investment is not to be taken lightly, because of the price of these goods. Some people have the possibility to acquire them with one lump sum payment but most of the people would consider various financing possibilities. One basic difference between car finance is personal or business use. Therefore numerous dealerships and banks have made it possible for people to finance their vehicle in the way that suits them the most. Here are some basic ways of acquiring a car the easy way if it is for personal use.

Car loan

Car loan is the most usual method people use to purchase their vehicle. When getting this type of loan, the lender provides you with the complete sum needed to purchase the car. You are required to pay back the lender in a certain period of time. This period may range from one year up to ten years in some cases. Good fact about this loan is that it is secured kind of loan meaning that your car is the guarantee that you are going to pay back the lender his money back. Having secured loan is a good thing, because many lenders will consider you as a trustful client and offer you really low interest rates. Usually monthly installments are fixed. These are some of the reasons why people decide to take this kind of loan.

Personal loan

Personal loan functions similarly to the car loan mentioned above. Money is acquired for the purchase of the vehicle and there is a pay off period that also ranges from one up to ten years. The basic difference is that this is not a secured loan. So in order to get approved for this kind of loan your credit score needs to be very high. This kind of finance is recommended for people with clear credit history because it may not be the best choice for a person with low credit score. Most of people will get approved for this kind of loan but their interest rates will vary from one case to another. Those with low credit score will be seen as risky clients and their interest rates may be sky high. On the other hand those with perfect credit history and score will have reasonable interest rates. So this kind of finance should be your choice only if you credit score is very high. However, no matter what your score is, you should visit numerous lenders and decide which of them are offering you the best pay off conditions. This way you will easily find the lowest interest rate loan.

However, if you are a business owner, there are other options open to you.

Car leasing

Car leasing is very appealing financing type and numerous companies use it. Let’s say that you need a car for your business over a period of three years and after that the car will be of no use to you. In this kind of situations leasing is the best options, purchasing a complete new car requires immense budget, but if you use leasing, the car is practically yours for the three years and monthly installments are much smaller compared to loan monthly installments. Of course if something changes during the leasing period, for example you would need the car after the expiration of leasing period, option of purchasing is still open and the car’s price would be much lower at the end of the contract making it very affordable. If however you no longer need the car, upon contract expiration you simply return it to the company that leased it to you. This would cut the companies expenses since you no longer need a car.

These are the most attractive ways of financing a car whether it is for personal or business use. You should always remember not to exceed your budget and stay within your limits. This way you will avoid enormous debt or in the worst case, car loss.

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