Buying a car is usually the second biggest investment in a person’s life, and financing the purchase of a car is commonplace nowadays, especially if the vehicle in question is of any substantial value. For most people, buying a new or used car of any worth outright for cash isn’t possible. So car finance gives you the option to purchase and ultimately own a vehicle that you may not otherwise be able to, much like how a mortgage is taken out to pay for a house.
Even if you do have the savings or means to buy a car outright, it is still sometimes a more sensible option to finance the purchase, as it allows you to release your money bit by bit in a controlled manner, instead of having all of it tied up in a vehicle, that could potentially get stolen, written off or depreciate considerably.
The car finance industry is massive, and if you are considering financing the purchase of a new car, there are many things to consider and be aware of to help you get approved car finance. There are several different sources to apply for and obtain car finance, with the obvious one being from the vehicle dealership itself. Still, you could also obtain finance from major banks and online financial institutions, and companies.
Financing the purchase of a vehicle through the dealership is usually the most convenient option. However, there are a few things you should be mindful of before approaching one. Financing through a dealership can often be ‘high pressure’; this is usually because the salesperson will be working on a commission basis, so will be pushing for certain add-ons and packages that, on the outset, may look worthwhile but ultimately may end up costing you considerably more. Things like insurances, extended warranties, and extra options for the actual vehicle itself to push the sale value up are all examples of this commission-based ad. If you are financing, it can be harder to see the extra amount these things cost as they are effectively ‘hidden’ and divided over the loan’s monthly payments or term of the loan.