Today, a car is a very common part of our lives. Most people use it to make it easier to travel from place to place, just as there is nothing unusual about it being used by many in business and employment. When talking about funding options, most people ask themselves a question – a lease or a loan? It’s not that simple after all. We will look at the currently available options that can be considered.
Definitely an option that can be described as the simplest. Although we are talking about cash as such, of course, we also mean the situation connected with the cashless transfer. This is an option where only the money saved is used to finance the car. This option has the advantage of not even paying the extra crown for it. The advantage is also associated with the fact that the car is immediately registered on the buyer, which can become:
- Natural person not doing business
- Natural person doing business
- Legal entity
While the benefits are more than enough, there is a disadvantage. Not everyone can save the sum. Especially when the car needs as soon as possible – in the coming weeks or months.
Labels such as car rental, car finance loan and many more can be found. But it is always the same. This option is now offered not only by banks, but also by non-banking companies. Often the big plus is that it is not always necessary to arrange the financing of a car in this way in advance. All you have to do is select the car and then write down the necessary documents at the bazaar or auto show branch and then just wait for the loan to be approved. Another positive aspect is that it is possible to finance:
- Different expensive cars
- Commercial and passenger cars
- New and used cars
The special-purpose loan also has its disadvantages. What are they like? Although in most cases the car can be registered immediately to the person of the buyer, it often does not have to carry a vehicle registration certificate. For example, if it needs a MOT, or to make another adjustment that requires registration, it must request it from the loan provider, who will lend it to that effect. Otherwise it is stored here.
This is also a way to finance a car. It is also known as a non-purpose consumer loan. Its name clearly indicates that anything you can buy for the money you earn. There is no need to state or prove the purpose. It is therefore an option comparable to conventional cash financing, as the buyer has the amount at his disposal and pays it to the seller. Another advantage is that the purchased vehicle is immediately rewritten to the new owner who has it and will have all the documents with him.
A non-purpose loan has its disadvantages. The first is that this loan cannot be arranged directly when choosing and buying a car. It is necessary to deal with it first, wait for approval and payment of money, and then it is possible to make the purchase with funds. On the other hand, there are quite a few options where a non-purpose loan may be in demand. It is about:
- Non-banking companies
- P2P loans
The third option of financing a car, which we look at, is the so-called financial leasing. Here we start with one disadvantage, which is associated with the fact that this option is intended primarily for entrepreneurs. That is, natural or legal persons that have an identification number. Private individuals who could take out a financial leasing are either unlucky or often only have a limited offer. Looking at the positive aspect of this option, financial leasing is usually associated with fairly simple execution and benevolent terms of approval.
It should also be said that financial leasing is quite a specific product. This is because the subject of the lease – the car in question – must be viewed from the outset as something that the buyer will not belong to during the repayment period. It is therefore a form of long-term lease, when the owner of the car is registered just the leasing company – which also owns the technical certificate of the car itself. Only after payment of the last installment is the actual transfer to the new owner, who gets all the documents to the car.
Possibility of financing a car based on the above. And that is because it is primarily a rental. Operational leasing has the advantage that it is not exclusively for entrepreneurs, since it can also be used by private individuals. Furthermore, there is the advantage that its approval is not associated with any complexity, both in terms of total settlement time and creditworthiness review. This is because, as in the previous case, the car is owned by the leasing company. The second reason is that we are talking about a classic rental rather than a standard purchase.
Operational leasing is characterized by the fact that it lasts about 2 years and has a certain allowed ramp. During these two years the agreed monthly rent is paid. After this time the car is returned and it is possible to take another car under the same conditions. Or there is a possibility to buy the car. The advantage is that you can still drive in almost a new car. The disadvantage is that if you do not use the buyback, the person is driving, but it will never be theirs.
Other credit products
What can they be? An example is a credit card or overdraft. A good option can be in case you are missing a few thousand for a better car. The wrong step, however, would be to use one of these loans, or even a combination of them, to finance the car. The reason is that we are talking about a variant that is very disadvantageous. Interest rates are tens of percent per year.