Thankfully buyers have many options when it comes to vehicle finance. Gone are the days when a car loan meant applying at bank for a loan with sky-high interests and no negotiating. Nowadays we have access to a diverse variety of financing options with these often being tailor-made to meet our specific needs. Customised home loans, car loans, bike loans, have made it easier for us to make investments and the financing there, stress-free.
Whenever someone thinks of buying a car or any other vehicle, the first thought that crosses their mind is how much they’ll pay in the form of instalments each month, and for how long. This very question covers three very important aspects of financing: affordability, availability of finance, and interest rate.
Vehicle financing offers future vehicle-buyers options that extend far beyond straightforward vehicle loans. These options include hire purchase and lease agreements or lease financing. Have a read below so that when you’re ready to pull the trigger and buy your vehicle you already know which one suits you the best.
In this method of vehicle financing, the buyer agrees to pay the amount in parts over a certain period of time. During this time the ownership of the vehicle stays with the owner or dealer who has made the sale. The transfer of ownership from the seller to the buyer occurs only when the last payment is made by the buyer. In case the buyer is unable to make the payments and defaults on it, then the seller has the right to repossess the vehicle. This method of vehicle financing is good for consumers as they can spread out the expense on the item of value (i.e. the car) over a long period of time, thus protecting them against a huge cash outflow.
For sellers and dealers, this is a beneficial scenario as the taxation of goods under the head of Hire-Purchase in the book of accounts gives them certain tax benefits. This method of financing is a win-win for both parties.
This is an up and coming method of vehicle finance in the market right now. It is comparatively easier and cheaper to obtain, this model is based on the agreement that the seller leases the vehicle to the lessee for a certain amount of time for an agreed upon price. The term for which the vehicle is leased can be anything between two to four years. After the expiry of the lease term the lessor gains possession of the vehicle for the purposes of disposal, or for leasing it to a new lessee.
Vehicle financing through leasing is beneficial for both the lessor and the lessee. In this arrangement the lessee has to pay a lesser amount than what he had to shell out had he taken a car loan. It is also easier to qualify for lease financing than qualifying for a car loan. For the lessor, who is in essence the seller still holds the ownership of the vehicle and can lease it again to a new lessee. This arrangement also has tax benefits that the seller can enjoy.
These new options of car financing or vehicle financing as a whole, have made it possible for many to own a car. Know your vehicle needs and understand the affordability angle in order to choose the best option for you. Contact Carfin today for all your vehicle finance needs.