So, you have zeroed in your plan to buy a new car. Isn’t it? But you must be wondering about how you would finance your car? Car finance is the answer that you have been looking for all these years. Many companies are ready to finance your dream car. You can pay them back simply in monthly installments. In recent years, financing cars have become a common trend and the easiest way to become a proud owner of the car. However, there is a slight catch here.
Many lenders are there in the market with several finance options. They will lure you with their advertisement, promise enticing offers, but as a wise buyer, you must first compare the cost and value, based on this, you must finalize the car finance company. In this blog, we will be unfolding various factors that one must keep into consideration while choosing a car finance company.
Steps to choose the right company:
- The budget of the car - Before you go ahead to decide the lender, it is important that you must first choose the car that you are willing to buy. For most of the buyers, this is pre-decided, but many of us still ponder over the fact, which would be the right car choice. So, the first step is to find out the car that you are willing to buy and its price.
- Check with the seller - Once you have decided the car, the next step is to check with the seller if they have the car finance offer you are looking for. Most of the dealers nowadays collaborate with the banks or non-banks, and other money lenders to finance a car. This not only helps the dealer in closing the sale but at the same time, it makes it easy for the buyer to easily avail the loan without running to the bank and sticking around with a plethora of paperwork.
- Compare the interest rate - Well, if you are not willing to go ahead with seller’s car financing scheme, you can yourself shortlist the loan providers based on the APR or interest rates. Different loan providers have different interest rates, although this will make a small difference when calculated in the long run, it has a greater impact on deciding the EMIs.
- Keep the loan term short - This is the most important point that you must take into consideration. Having a short-term loan is a better idea than going ahead with the long-term loan. With a longer term, it may appear that you are paying lesser EMIs, but when you calculate the EMIs in a longer run, then you get to know that the interest is turning out to be even more. To avoid this situation, the best step is to keep the loan term not more than 60 months.
- Check the Payment Protection Insurance - Many buyers end up taking PPI or Payment Protection Insurance without calculating the value for money. Most of theis insurance have limited coverage, so if you have planned to take this insurance, it becomes imperative that you must calculate the coverage offers.
Well, these simple steps will not only save your time but also it will help you in finding the right car finance company that will help you buy the car. However, an important point to note here is that you must calculate pros and cons, along with other charges that the lender might levy, before deciding to avail car finance from a company. This will help you in choosing a firm which will offer you a deal that will be in your best interest.