Car Auto Finance, leasing, classic car financing
You may want to find auto finance or leasing for your new or used car and it can be quite confusing , with hire purchase, personal loans, bank loans, leasing, lease contract, baloons, residuals, APR and flat rate.....
To try to simplify there are essentially two types of car financing; First is where the loan is secured against the borrower (you, your property or your Company). The second where it is secured against the car.
Both are ways of financing a car......but costs vary dramatically so always check to see what the total cost of the car finance might be.
Estimate as best you can what the eventual value of your car may be at the end of the period. The total cost of the car and the auto finance less the estimated value of your car at the end of the term is the real cost. Deposit paid + finance charges - end value + total cost.
Be a little cautious of how much a salesman might predict your car to be worth in three or four years time. Almost all cars depreciate, some faster than others. One way you can consider this for yourself is to estimate what is a similar car is worth today (one that is as old as yours will be at the end of the finance period).
Be aware some car financing will have a set up fee. Auto finance brokers companies may be making additional commission from insurance products such as ;accident or sickness cover, redundancy, GAP (the difference between the pay out from the insurer should your car be stolen and the actual price you paid). You may be able to go to an insurer direct to take one of these products for less then the finance company.
Percentage rate. Clearly the higher the rate the more the money is costing you. The rate is calculated by all sorts of means but there is a rule of thumb.....the greater the risk the higher the rate. Therefore older cars (that may be more difficult to calculate end values) will usually attract a higher rate.
With classic a car finance you may be best advised to find a specialist for that market, one who understands and is comfortable with the value at the end of the term.
If you don't intend to keep a car long discuss the penalty for early settlement with the Car finance company, or bank.
NOTE: Always exercise due diligence and get professional legal advice (which this is not). Advertising on this page does not imply that it is endorsed or recommended by performance2and4.