Go back a few years, and people buying a new vehicle would have one option: to pay in cash. If you didn’t have the cash for a vehicle, you couldn’t buy it. It was as simple as this. Now, financing options are more expensive than ever before. Here are some of the different options to consider before buying your first car!
Cash
Of course, the traditional method of buying a vehicle with cash still exists. Whether you have paper money or funds sitting in a bank account, you’re welcome to buy a vehicle outright. Once you sign all the paperwork, you become the owner, and the vehicle is yours until you decide to sell it.
Despite the many positives, the problem with this method is that you might not have the funds to buy the vehicle that you want. Alternatively, you might just want to spread the cost of the vehicle over many months. Either way, it’s important to explore your other options before making big decisions.
Hire Purchase (HP)
Essentially, this financing option means that you hire the vehicle until you make the final payment. During the terms of the HP, you won’t own the vehicle at any point; this only comes after the final payment. If you fail to make monthly payments, the lender can take the vehicle back to compensate for the loss.
Since you’re required to make an initial payment, it’s possible to reduce the amount you pay monthly by increasing this first fee. The more you pay at the start, the lower the outstanding balance (and therefore the lower the monthly payments). Depending on the vehicle, you’ll pay the monthly amounts over one, three, five, or even more years.
Personal Contract Purchase (PCP)
This time, you’ll have a contract like what you get with a mobile phone. Just like an HP, it starts with an initial fee followed by monthly payments. However, this time the contract only lasts for a couple of years. In the end, you can either pay the rest of the fee to own the vehicle or trade the car back in for an upgrade.
If you choose this route, know that you’re often restricted in annual mileage. When you exceed the annual mileage, you may have to pay additional fees. For those who like to have modern cars, this is a good option because you can upgrade every couple of years.
Personal Loan
Sometimes, people in the market for a new vehicle don’t like the terms that come with PCPs and HPs, so they take out a personal loan for the vehicle instead. With this option, you’ll own the vehicle just as you would buying with cash…because you are paying the full amount upfront. Then, you’ll pay the lender back using the agreed terms.
Summary
Every year, it seems as though financing options for car shoppers improve. If you’re to make the right decision for your financial future, don’t be afraid to shop the market, do some research, and speak to professionals.
If you’re looking for fast and easy auto financing in New Brunswick, you have lots of options.
You don’t need to be searching for a new vehicle to benefit from finance options; for example, you’ll find pre-approved used auto loans and leases to pay for your vehicle.
Whether you lack credit or have a poor history, you’re likely to find something with some digging. Why not start the journey to your dream car today?