Methods of Payment When Buying Your Dream Car

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When you decide that it is time to buy your dream car, the first thing you must do is to carry out some research on the dealership in your area. It helps you determine where you can get the car at a fair price. Find out the payment options they accept and their terms. Of course, you need to be cautious especially if you will be paying by installments. Ensure that there are no surprises or hidden fees.  In this article, we look at how you can finance your dream car.

1. Paying cash

If you have been working hard, you may have saved enough money. So it makes your work easier since you don’t need loans to buy your dream car. All you need to do is to identify the right dealership and agree on how much you will pay. Now since you will be paying in cash, it is essential that you get the best deals. Most dealers will offer you discounts if you pay cash. So ensure you do some research on the best offers available.

2. Using loans

Talk to your bank and see the different types of loan products they offer. Look at the interest they charge and compare it with what your dealership will give if you buy the car from him on hire purchase terms. The interest rate the bank is charging on loan should help you decide whether you secure the loan or not. If you have a bad credit score, it may contribute to the interest you pay.

So, the first thing you need to do is to improve on the score before you start shopping for a loan. Your bank will tell you the maximum amount you can get given the circumstances. But ensure you use your disposable amount to determine the amount you can take. It will ensure that you don’t default in the loan payment.

3. Re-mortgaging

If you have a home mortgage, you can use it to buy a car. All you need to do is to restructure the existing loan and get some money to buy your dream car. Notice that the interest charged on a home loan will always be lower. Of course, if you ask some people, they will tell you that using your home equity to finance your dream car is a terrible thing. They argue that re-mortgaging should only be used as the last resort to bail homeowners from financial difficulties.

Pros and cons of car finance using pre-existing mortgage

Pros:

— It is quick to access the money

— You don’t go through the checks required before qualifying for a loan

— Your loan repayment does not change.

Cons:

— The loan is compounded, and so you are likely to pay more.

— Time- the term for your home loan will be extended.

4. Hire Purchase

If you enjoy an excellent credit rating, you may buy your dream car through the hire purchase terms. You will get the best deals if you can raise the deposit required. However, check and ensure that the total amount you pay is not higher than buying using other finance options.