Tips on Buying a Used Car
There are a number of hurdles to be weary of when negotiating with used car dealers and purchasing a vehicle on offer. However, another consideration that is often overlooked is how exactly the customer is going to pay for it. That is why we have listed a number of tips below to help potential customers when making such an important purchase.
Know How to Finance the Purchase
This may sound obvious but consumers can often get blindside by the myriad amount of seemingly amazing deals on offer from car dealers. It is extremely important that the buyer knows exactly how much the vehicle will end up costing once all repayments have been met. They should consider what the corresponding APR interest rate is and also the limitations and restrictions that they are signing up to when buying into a deal.
Financing On Your Own
Often it can pay dividends if you choose to personally organize the payment for the car rather than buying into a deal offered by the used car dealer. Some of the deals offered by such salesmen mean that you do not ultimately own the car, even after you have met all the repayments. If the customer is able to sort out a loan or even better, have the money already available in the bank, it puts them in a much stronger position when it comes to negotiating over the used car.
The benefits of a cash payment are evident. It means you will not suffer from the extra cost of interest bound up in the monthly repayment plan. Furthermore, you do not have to worry about ownership and any deals that are structured in such a way that you never end up having full rights of possession. However, people often need to get hold of a vehicle sooner rather than later and do not have the time available to save up in order to pay in one lump sum.
Another consideration is getting a personal loan rather than a loan arrangement with the car dealer. Rates for personal loans have plummeted to record prices and deals at 4% or lower are not unrealistic if you look around the market. A consumer is likely to get a better rate than compared to the ones offered by the dealers such as car hire purchase contracts. In order to get the best rates, ensure that your credit score is within acceptable limits and be careful about reapplying for loans as this may negatively affect your score.
Offers from Dealers
The deals offered by used car dealers will be alike to the personal loans but they are organized through them and often come at more expensive rates. There a number of different types of deals.
There is the personal contract plan which involves paying a deposit and then meeting monthly repayments over a set period of time. There will be an amount at the end of this period to pay if you want to have ownership of the vehicle. Instead, you can give the car back and not have to pay this final sum. This payment at the end is tied up in the guaranteed future value. Personal contract plans often have limitations set in the contract such as annual mileage restrictions that one should look out for.
Hire purchase agreements are another type of loan often proposed by dealers. With this deal, the consumer will pay a deposit and then have to meet repayments that have interest added to them. These deals are organized so that by the time all repayments have been met, the customer has full ownership of the vehicle.
Additional deals to consider are leasing arrangements and personal contract hires. With these contracts the consumer is essentially renting the car and there is no option or final payment at the end to claim ownership of the vehicle.
When considering all the possible routes to financing a used car purchase, ensure that you are weary of administration fees and additional costs that get attached to contracts. Above all, make a comparison between the cost of purchasing the vehicle with one lump payment or through a monthly schedule and make plans accordingly. Financing the purchase yourself can often be the most expedient option to take.