If your current car breaks down often and leaves you stranded on the roadside, it struggles to start, and repairs are starting to cost a fortune, then it’s probably time to get a new car.
Not everyone has a thriving bank balance with enough funds inside to comfortably purchase a new vehicle with cash. Fortunately, there really are other ways to drive a new car; vehicle financing and personal loans are two prominent options, while vehicle leasing is another.
While vehicle leasing is an option comparable to renting, your monthly installment will allow you to drive the vehicle, although you won’t take ownership at the end of the lease. On the other hand, you can opt for vehicle financing or a personal loan.
We compare the latter options to help you make the most informed decision when shopping around for your next new car.
Vehicle Financing
With vehicle financing, you will probably enjoy better interest rates because the bank will legally own the vehicle. Therefore, your car stands as direct security of repayment, and your interest rates will be lower.
If you fail to make payments for the car, it will be repossessed and sold to cover the debt total.
Even so, lenders can be pretty fussy about who they approve for this type of finance, despite the vehicle serving as surety. As a result, it’s essential to ensure you have a good credit score, meet the requirements, and use a car finance calculator to pre-budget for the repayments.
On the other hand, if you don’t meet the requirements for vehicle finance and cannot obtain pre-approval, the next option to consider is a personal loan.
Personal Loan
With a personal loan, you might pay higher interest, although there is less risk for consumers as the vehicle won’t be repossessed if payments are missed. However, your credit score will still plummet, and creditors will take legal action accordingly.
Nevertheless, lenders are a lot more lenient when it comes to personal loan approvals, although you will still need a good credit score and a stable income.
When applying for a personal loan, it’s essential to compare all your options and apply for pre-approval with no more than three lenders in one month. A surplus of applications for financial assistance can degrade your credit score. Moreover, it’s also important to compare deals to find the lowest interest rates.
Whether you decide to apply for vehicle finance or a personal loan, once you have purchased a new car of wheels, there are a few essential things that you must do; this includes purchasing auto insurance and keeping up with vehicle maintenance and repairs. It’s necessary to take care of your car to uphold its value over time.
With this, if you’re skeptical of the importance of car insurance, it’s key to understand that this type of insurance protects drivers from the high costs of instances like accidents and theft while also providing peace of mind.
