Although you have already been saving for a new car for a while, it can be difficult to collect the total amount for this. Borrowing money for a car is therefore a good option to finance all or part of the amount. But which forms of car financing are available? And what do you have to think about and pay attention to when buying an installment car?
Different forms of car financing
Car loan through the dealer
You can choose to apply for a car loan through the car dealer. This initially sounds attractive because in many cases you pay less in the first year than afterwards. Be realistic when it comes to this type of offer. They are often more expensive than if you were to finance the car with a car loan through a lender. The interest rate is often higher and repayment-free can also be a problem. The most important thing is that the car is really yours when the entire loan has been paid off. What happens if you cannot pay this in the meantime? Then the car can be reclaimed and you naturally want to prevent that at all times.
Take out a personal loan
If you want to be sure that the car is really yours, you can apply for a personal loan to finance your new car. We often recommend this as the best option. This way you don’t have to buy your car on installment. You can borrow the money from the lender to purchase the car in one go and then pay them off. The big advantage of this is that the car is already yours, you can build up claim-free years with your insurance and you don’t have to worry that the car can be purchased.
Do not take an unnecessarily high car loan
As with all loans, we recommend that you carefully consider the amount you want to borrow. The newest car model may sound appealing, but is this also true if you are still paying off in years? The car is then no longer new and in the worst case you don’t even have it in your possession anymore. If you take out a car loan for a less new model, your loan will be repaid faster or the monthly costs will be lower.
So think carefully about how long you want to drive the car and what amount you want to spend on it every month. Also, remember that cars decrease in value and you no longer get the same amount for this when you sell. Especially with the newest models you lose a lot of money on this.
The loan must be covered
Although you have to think carefully about the amount, it is wise to reserve a sum of money for any additional costs. For example, first list them. What do you expect to spend on maintenance, gas, road tax and insurance? Can you bear this amount with your regular income or do you want to reserve an extra part of the car financing for this?
Borrow money for purchasing a car
Make a good comparison betwee the various providers before you enter into car financing. There are many providers on the market that offer personal loans. However, the conditions can vary a lot and you can save a lot on this every year.
You can compare the loans on these points:
- The amount of interest
- The possibility of interim penalty repayment
- The duration of the loan
- Extra costs such as rescheduling and / or closing costs