I do the best I can with the money we earn, but sometimes it just doesn't make it through to payday. If you don't have a great credit history, it can be hard to make a successful application for a credit card or personal loan. Unfortunately, my partner has a really poor credit history, so we struggle to get loans through traditional paths. Instead, we rely on loans from friends and family as well as payday loans. This blog is all about the ways to make it through to the next pay if you have a bad credit rating like us.
Got your eye on a new car? Well, before taking the plunge, take time to consider your financing options. You'll want to consider interest rates, fees and the term of the loan, rather than just the monthly repayment figure, when assessing affordability. Here's an overview of three ways to secure that new car:
There a couple of reasons to consider using a personal loan to buy a car. Firstly, some banks and credit unions offer preferential rates if you already have an account with them. These rates are reserved for those with an existing relationship with the bank or credit union as they have already been able to see how you manage your finances. Secondly, a secured personal loan is considered less risky than some other forms of borrowing, such as an unsecured loan, so the criteria isn't as stringent and rates are competitive. However, it's important to remember the car will be used as collateral, so if you fall behind with your payments, the car can be repossessed.
It's easy to see why dealership finance is attractive. You can often have the loan application approved right away and drive home in your new car the same day. However, you should remember that dealership staff typically have targets to meet and may guide you toward the loan product that offers them the most commission. The convenience of being able to secure finance right away can tempt you to commit to a larger loan than you can really afford. Additionally, finance packages vary between dealerships, so shop around and ask the dealership with the car you want to match the finance terms offered at other local dealerships.
This type of finance is similar to leasing a car, but you have the option to keep it after the term of the agreement. Your finance agreement is between you and the car manufacturer, and this finance option is only available for brand new cars. You can pay a monthly repayment amount that covers the cost of purchasing the car over the agreed term, or you can pay a reduced monthly payment for an agreed period of time and pay a lump sum at the end of the loan term. If you don't pay the lump sum, your car will have to be returned to the manufacturer. When looking at this option of paying reduced payments, consider whether you'll be able to pay the remainder of the balance at the end of the loan period. It would be a shame to pay for a car for a year or two and have nothing to show for it at the end.
These are just a few suggestions of ways to finance your next car. Whatever type of finance you choose, take running costs, such as fuel and servicing, into consideration when selecting the best type of car loan for your circumstances.Share