Anyone who decides to buy a car will inevitably wonder how best to do it. There are three options: to save the necessary amount, to take a car on credit, or to make do with renting. Each case has its own advantages and pitfalls to consider. There is no consensus about the best option, even among specialists. What to say about the average person, not well versed in the nuances. So it is worth to dwell in detail on the main points.
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To save for a car
A couple of decades ago, you could buy a car only with personal funds. To do this, some people sold something big or went into debt, while others saved up in a mode of tough economy, denying themselves not only various pleasures, but also sometimes the most necessary things.
Many people today still consider buying a car with cash the most profitable way. There is no need to overpay interest and buy an expensive policy. But it is not always possible to gather the necessary sum quickly. And when you consider rising prices, inflation and force majeure circumstances, the purchase can be constantly postponed indefinitely.
Experts believe that this type of payment is more profitable in the secondary auto market. Having money in hand, you can bargain faster and get a discount. True, we mustn’t forget about possible repair expenses. It is not excluded, that hidden defects will be revealed, and you will have to invest in restoration of the car.
Specialists warn: when buying in a showroom, cash payment will not give you any advantages. The price will not be lowered, no beneficial conditions will be offered. On the contrary, no discounts are provided in this case, so a person will rather overpay than save. In addition, clients with real money in the salons are considered of little value. In fact they pay only with auto-manufacturer. And they kick back a little bit to the store.
But a buyer with auto loan gives profit to the bank, insurance company and dealer center. It is also easier to motivate him/her in the future to buy another car, offering a tempting discount as a regular customer. This means that the partnership will last for several more years and will feed the market participants.
To get all sorts of plushies, you can try the following option. Take a car on credit, using the allowances and discounts, and then repay the debt ahead of schedule. In this case you will be able to save a lot of money. If, of course, the agreement provides for the early repayment of the loan.
Car Loan: advantages and disadvantages
First of all – because of the low interest rate. Moreover, it applies to both new and used vehicles. This is explained by the fact that the car, which the client uses, will be in pledge with the bank until the end of payments. And in case of non-payment he will be able to get his property back.
The second reason is that the hull insurance policy covers the entire period of the auto loan repayment. Many potential buyers are confused by the cost of the service, as they consider it overpriced. But if you add up the discounts that automakers provide, they can more than cover the cost of insurance.
You should also take into account that many models can be purchased under the state program. If the car is included in the list of those provided, then the state will pay 10% of its cost.
Consumer credit
The interest rate in this program is higher than that of the car loan. But there is no need to pay a down payment and buy an Casco policy. Once the documents are drawn up, the owner receives the car and can dispose of it as he sees fit. He can use the car for driving or sell it at any time, closing the debt to the bank or to continue paying off. Or use the vehicle as collateral for another loan.
Life insurance in a consumer loan is mandatory. The amount of the service is immediately calculated and included in the total cost, so you will still have to pay extra interest. But the insurance contract is canceled after early payment of the loan, and the remainder of the money is returned to the client. Except for the interest paid – they remain with the insurance company.
And one last thing: the car owner is not obliged to adhere to the warranty agreement. That is, if necessary, he/she has a right to address to private persons or any auto service not mentioned in the contract. So, he/she will be able to save money.
A significant disadvantage that scares people away from taking a car on credit is the risk of losing permanent income. If a person loses his job and is unable to make timely payments, the cost of the car will become much higher due to penalties.
Rent a car
Car rental is the optimal option for those who need to travel, but do not have a possibility or desire to own a car. Having signed an agreement with the company, the client immediately obtains a vehicle.
The benefits are obvious. First of all, this is saving of means. There is no need to save up or take a loan. The rent is much lower. Secondly, it saves time. Plus there is no need to deal with paperwork and maintenance. All worries are taken care of by the landlord.
But there are also disadvantages of this option. If you intend to use the car for a long time, the total cost of rent will cost a pretty penny. It can be comparable with the purchase of one’s own car or even higher.