There are several ways one can obtain car financing, with a personal loan being one of the most popular methods.
Purchasing a car with a personal loan allows one to borrow money from his or her chosen financial institution. It also makes it possible for the buyer to ultimately pay for the car entirely. As a result, the buyer owns the car completely. Since the debt owed on the car is paid off through personal loan car financing, the car owner also has the freedom to sell the car or to trade it for another.
Hire purchase is another type of financing for cars. This method involves forming an agreement between the used or new car dealer and the buyer. In this arrangement, the buyer is asked to pay a deposit of anywhere from 10 to 20 percent of the total price of the car. Monthly payments are then set based on the amount of money still owed. With this type of financing, the car is not fully owned by the buyer until all monies are paid off.
Re-mortgage is another choice for car financing. This method is specifically designed for homeowners. With this method, the buyer can re-mortgage his or her home and use the extra money to purchase a car. For those who own property and have an existing loan, the same idea can be implemented with refinancing the loan. Refinancing allows the borrower to get more money from his or her financial institution, which can be applied toward car financing.
Interest-free car financing and personal contract purchase are other popular methods. Interest-free car financing is usually offered only with new cars. With this type of financing, the buyer can get a new car without paying interest on the total cost of the purchase.
Personal contract purchase, on the other hand, is commonly used with banks. Monthly payments are extracted from the buyer’s bank account for a minimum of two years and a maximum of four years. The borrower and bank account owner then has the choice to either pay off the car via a lump sum payment or to return the car after this time period is complete.