Borrow money for a car
Why borrow money for buying a car?The major advantage of borrowing money for buying a car is the deferred payment. You pay a piece every month, whereby the car salesman often offers a low interest rate. That way you can still drive a nice new car and you do not have to bear the financial burden at once, but you pay in installments. This is very easy.
The major disadvantage of borrowing money for the purchase of a car is in the total purchase price. If you borrow money you pay interest on this. The final price you pay for a new car is often a lot higher than the initial selling price. It is also easier to go into all kinds of options on a car because you still pay off each month. After all, the extra options that you buy are just a few tens extra per month.
Therefore, wait until you decide when you want to buy a car. It is better to think about it for a day than to decide right away. This is mainly due to the emotion when viewing a new car. You are in a certain intoxication and can no longer think objectively.
Financing forms for buying a carYou can finance a purchase in many ways. All financing can be summarized in 2 main categories: a personal loan and a revolving credit. The big difference between the two forms is that with a revolving credit you can redo the repaid portion. There is a maximum limit for 'being able to be in the red'. You also have more flexibility in the loan with a revolving credit. The disadvantage, however, is the higher interest rate. The interest rate is lower with a personal loan.
- repayment is a fixed amount per month
- repayment consists of a fixed amount + interest
- loan depends on high income and fixed costs
- fixed, agreed duration
- pay off every month
- repayment consists of amount + interest
- repaid amount can be withdrawn
- credit depends on high income and fixed costs
- unlimited duration
The duration of a loanIf you want to buy a new car on installment, you have to think carefully about the term of the loan. It is smart to adjust the duration to the expected life of the car. If the term of the loan is longer than that the car lasts, you can end up with double charges. It is also wise to take out an all-risk car insurance policy. If the car gets a total loss due to your own debt, you can get into trouble during the term of the loan. After the term of the loan has expired you can adjust the car insurance to a lower coverage variant.
Buy a car with installment with BKRBecause car sales occasionally fall into a dip, there are more opportunities on the market to buy an installment car. This is also the case if you have a BKR registration / listing. Car dealers are eager to sell cars, so also to people who have a BKR registration. You have to make a careful assessment of whether the monthly charge can be borne if you want to buy an installment car.
It is important for the car dealer to know that you can repay the loan. If you can bear the monthly charge and you have a BKR listing then you can often still buy a car if you can prove that you have the financial room. Together with the dealer you prepare a solid plan in which the financing is arranged.
Buying a car based on rental purchaseThis form of financing is most similar to leasing. You enter into a kind of lease contract with the dealer whereby you pay for part of the new car. You can also often trade in your old car and thereby pay for part of the new car. Then you pay an amount per month for use. Please note, these amounts are quite high. The costs of maintenance and fuel are on top of that.
The difference between a hire purchase and a lease contract is the reclaimability of the car. With a lease purchase contract, the dealer can immediately reclaim the car if you have missed a payment. This is not so easy with a lease contract.