There are various ways to finance a car. You can contact a bank directly or get financing through the car dealer. The right choice depends on various factors and it is not necessary one option is better than the other. Each borrower has specific borrowing requirements and financial staanding. A particular car finance NZ solution is selected based on these factors. You will save time and money if you select the right financing option.
Bank Financing
Most people use this option to get a vehicle loan. The bank will first check your creditworthiness, credit record, income source and other details. The loan will be approved quickly if you are eligible to receive its loan. You will have to pay some fees and an interest on the loan amount. You also have to make a commitment to repay a part of the car purchase amount initially. The higher this amount, the lower the loan amount and subsequently lower the monthly repayment amount. By having this preapproved loan with you, you can enter the car showroom and walk out with the new vehicle. You will avoid the salesperson trying to push add-ons you do not need.
Dealer Financed Car
It does not mean the loan will be given by the dealer. This option simply means you will be getting the finance for your car through the dealer. You will be asked to fill a credit application by the dealer. This application will be submitted to many lenders. You get the option to compare interest rates and terms of various lenders. You can expect to receive even 0% APR if you qualify. It is possible to buy a new car at lower interest rate through a dealer. The selling company has an incentive to find the best financing solution for a prospective buyer. This way it can sell more vehicles. It will try hard to get you the loan you can borrow and afford.
Hire Purchase Option
This option is generally used by the transport operators and other commercial enterprises. They have a regular source of income through their business so they prefer this option. Under this plan, the borrower keeps paying the rental amount every month up to the specified time limit which can be several months or years. Once this rental term is complete, the borrower becomes the owner of the vehicle. Some charges may apply at the end of this process. The borrower can choose to return the vehicle and not pay this amount, or pay this amount and become the owner of the vehicle.
With all these car finance NZ options, the main goal is to avoid paying the high cost of a car upfront. When the whole cost of a car is spread over several years, it becomes easier to own a car. Monthly repayments are easier to repay.
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