Whether you want to trade your old car for a newer model or a zero car, you’ll have the options to buy it in cash or to finance it. Although it is ideal to buy it in cash, the time required to raise all the money can make the financing option. more viable. That is why, in today’s post we listed some benefits of auto finance to show you how this option can help you get your new car. Check-out!
Understand How Financing Works
Financing is a way of acquiring a good in installments. It allows the person who does not have enough capital to buy the car in cash to do so in installments that fit his budget.
When making a financing proposal, the buyer goes through a credit and repayment analysis by the financial institution. If approved, the buyer will usually have to pay between 10% and 20% of the value of the incoming good, and the bank will finance the remainder with interest.
The most common form of financing is Direct Consumer Credit (CDC), with the mortgage of the vehicle in favor of the bank. In this mode of financing, the consumer receives the value of the loan contract directly in his checking account, in order to enable the purchase of the car. However, during the term of the contract the vehicle will be fiduciary sold to the bank as a guarantee of payment.
This means that although the car stays with the buyer, the property will belong to the bank until the repayment of the loan ends. Once settled, the vehicle then goes to the name of the buyer, who can freely dispose of it. As the car itself serves as collateral for the loan, if the buyer fails to pay back the bank can take the vehicle and auction it to repay the remaining installments.
As you can see, the financing is indicated for those who can not wait to acquire the good in cash, but have part of their free income, allowing the payment of benefits.
Know the benefits of financing
Now that you know how car finance works, we will list below the main advantages of purchasing your car this way. Look:
You already drive
As you may have noticed, the biggest advantage of financing is that you can buy the dreamed new or used car without having all the money in hand. The cheapest zero-kilometer car on the market today costs around 32 thousand dollars. Let’s say you save about $ 700 a month. In that case, it will take you almost 4 years to buy your new car. Is a long time!
With financing, you don’t have to wait several years of hardship to buy your car. Once approved by the bank, you will choose the preferred model, close the deal and drive away!
It’s easier to commit to your goals
It may be that during the period when you are raising the money to buy the car, you “fall into the temptation” and use some of the value saved for other purposes, further delaying your dream of changing cars. If you fund the vehicle, you will have committed yourself to your monthly goal and will remember this before you spend your money on other goods.
Possibility of advance payment of installments
Many people are afraid of buying a car in financing for fear of interest, but forget that by anticipating the installments it is possible to reduce them considerably. Thus, you have the vehicle at hand immediately and reduce the interest and term as your financial availability.
But you need to be warned that when financing, you should be aware that you will make a financial commitment that could take years to pay off. Therefore, careful planning will be necessary, which should take into account other vehicle costs such as IPVA, maintenance, insurance etc. In addition, you should limit your benefits to a percentage of your salary that is comfortable to you and does not compromise your quality of life.
Contact our specialists to know in detail all the products and still ask your questions.