Buying a new car, but not even a better one, is not a cheap thing at all. But everyone wants to be mobile and most people try to get their own vehicle as soon as possible.
Unfortunately, not everybody can afford a car from his own pocket, and saving up to several hundred thousand is usually not a matter of months or even years for a man with an average salary. One option is to try to get a “sponsor” from family or friends, or to wait patiently and save each crown from income until the desired amount appears in the account.
Another option is to raise funds from an “external” source – and it should be noted that this option now enjoys perhaps the most popular ever. Loans, credits and leases are available at every step, and people hear very well about these possibilities.
So if you decide to follow this path, the question is: what loan to choose? Is a special-purpose loan, non-purpose loan or leasing better? Let’s look at this question in more detail.
Non-purpose vs. special-purpose loan
Non-purpose loans now offer a huge number of banking and non-bank providers. No one asks what you need money for, and the loan is usually very easy to access. So if you do not want to confide in anyone and want money on hand and as quickly as possible – choose this option. However, expect higher interest rates and APR.
Special-purpose consumer loans have one main advantage, namely lower APRC and interest rates. But the thing may not be as clear-cut. Some companies offer special-purpose loans with terms that can be a significant obstacle to someone.
For example, they may require a large vehicle registration card for the entire loan repayment period with the provider. The paying person thus gets the car, but it is not de facto the owner, but only the user. This can be a serious obstacle for entrepreneurs.
The lender may also sometimes require the client to take out accident or other insurance with the loan. It is therefore necessary to calculate very well whether lower interest rates and APRCs for a special-purpose loan really pay off.
Banking vs. non-bank loan
You will probably also decide whether to take a loan from a banking institution or from a non-banking company or a private entrepreneur. Each variant has its own pros and cons and today it is possible to obtain interesting and advantageous loans for both of these “camps”. But how to choose the right one?
Today, however, it is not so easy to list the clear differences or advantages of the banking and non-banking sectors. However, very often the following applies:
- Banking providers are more testing clients’ creditworthiness; non-bank loans, on the other hand, are more affordable and usually settled faster
- Banking companies tend to be more responsive and flexible, which may be useful in repayment problems
- In the banking sector there is less risk of collision with a fraudster or a very disadvantageous, sneaky loan, etc.
Leasing is a very popular way of financing a car. But is it really as convenient as it is popular?
Leases offer flexible repayment options, are easily accessible, and are often part of leasing payments as well as MTPL and motor hull insurance. The leasing process is very simple.
The disadvantage, however, is that the car remains the property of the leasing company for the period of repayment. However, under certain conditions, entrepreneurs may claim repayments as a tax-deductible expense.
In addition, a so-called down payment is typical of leases. As part of this down payment, you have to pay part of the price of the car at once. The amount of down payments is very different, they can be up to 50%, but you can also get a zero down payment. Whether a down payment is an advantage or an obstacle – you have to judge for yourself.
With non-purpose and most purpose-built loans, you can get the full value of your car immediately on hand and you don’t have to worry about down payment, and the car becomes your property right away.
The main thing is to carefully read the conditions and carefully choose
Whichever option you ultimately decide, think twice and calculate your choice. Some apparent advantages may, as has been said, be outweighed by unfavorable conditions, etc.
Always choose loans transparent and from reputable providers.