Affordable Auto Sales -
Know Your Finance Options



If you are investigating affordable auto sales, then understanding your finance options will help you with a saving-wise decision when you lease or buy a car.

affordable auto sales


One of the most financially pragmatic of all buying a car tips is to know exactly what you are letting yourself in for when it comes to cash financing, bank financing, hire purchase finance and car lease financing.

If you can afford to pay cash for your new or used car - then you are well on your way to saving yourself a great deal of money on the interest payments alone. Well done!

If however, you need to finance the purchase of your vehicle using either an auto lease contract or a higher purchase agreement - then read further.

Being informed allows you to confirm that you have chosen the most cost effective payment plan and it also alerts you to hidden costs and car residual values.


AFFORDABLE AUTO SALES

There are a number of differences when it comes to choosing between hire purchase finance or car lease payments when it comes to financing your auto sale.

Knowing the difference helps you to make an informed decision when it comes to sourcing the most affordable finance package for your potential auto sale.


Hire Purchase Finance - Hire And Ultimately Buy The Car

Hire purchase contracts are generally offered to clients via banks and more recently via some vehicle manufacturing divisions.

The basic premise behind hire purchase finance - you hire the car; you pay it off over a fixed period of time and then once you have completely paid for the car - it becomes yours and is put into your name.

But, up until the last payment is made, the car remains the property of the bank or finance company.

So be aware - if you are unable to pay your monthly installment, the auto finance company can, and often will, take back their car until payments in arrears are settled.

You will probably need to put down a deposit of roughly 20% (sometimes higher) and your monthly car payments will extend over a time frame of an average of 50 months.

Please be aware:

The finance company makes its money on the monthly interest that it charges you over and above the capital repayments.

The interest rates charged are generally higher than average home mortgage rates or standard bank rates.

So, finance companies want you to pay for the auto sale for as long as possible.

Therefore, you may incur penalties for accelerated payment time frames.

So, make extra sure that you read (and more importantly, fully understand) any underlying penalties and the specific terms and condition of your contract in your quest for affordable auto sales.


Automotive Lease Guide - Generally More Towards Hiring The Car Only

An auto lease contract can be a viable option if your company offers you a monthly vehicle allowance whereby you are able to claim a certain percentage of your monthly mileage and travel expenses.

You are not expected to pay a deposit and generally the maximum time frame for your car lease payments is a period of five years.

According to the specific terms and conditions of your lease, the car can then become your property.

As detailed above, car lease financing appears (at face value) to be an affordable finance option, but yet again ...

Please be aware:

The long-term accumulative interest that you ultimately pay to finance the "affordable auto sale" is generally significantly higher than the actual purchase price of your vehicle and higher than most conventional financing.

Monthly car lease financing is often less than higher purchase options but -

Please be aware:

Auto lease contracts also generally leave you with a lump sum balloon payment or car residual values at the end of the payment time frame and contact.


Automotive Lease Guide To Car Residual Values

The balloon payment or car residual value can be roughly twenty to thirty five percent of the cost of your new car over the five year period.

You need to pay this lump sum to the car dealership or the finance company if you want to ultimately own the car.

Please be aware:

Generally vehicles depreciate almost sixty percent over a five year repayment period.

So, tread cautiously if the auto contract lease is higher than forty percent of the car's purchase price.

Ultimately, your aim is to be able to sell your car at the end of the lease time frame for its market resale value, owing nothing.

(if your car has high mileage or it is in a poor condition) then the resale market value of your car may be even less than the residual still owed to the lease company.)

So, you don't want to be in a position to have to sell your car so that you can pay for the residual.

Some finance companies may allow you to refinance your car (if it is in a good condition) to fund the outstanding balloon or residual payment - but remember you keep paying more and more interest!)


Whether you are looking for affordable auto sales and tips for used cars or new cars - it'll save you money if your financial education extends to include hire purchase and car lease financing.



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