The total purchase price
Before thinking about how to finance your car, it is important to calculate precisely the amount necessary for this acquisition, taking into account its price as well as all the ancillary costs. Nothing should be overlooked and it is advisable to draw up a list of all expenditure items such as:
– petrol,
– insurance,
– maintenance costs (revisions, technical inspection, tire changes, etc.) ),
– the cost of parking.
The calculation of these additional amounts is different for the purchase of a new or used vehicle. For a new vehicle, the starting cost is higher. Same thing for insurance because it is recommended to insure your car ” all risks”. On the other hand, the cost of maintenance is lower in the first years. There is no need, except accident, to change many parts of the car. In addition, it is possible to take advantage of a guarantee for the first few years, for nothing to have to pay.
By opting for a used vehicle, the expenses are different. On purchase, the price is lower and by choosing to insure it “by third party”, the amount of the insurance premium is lower. However, the cost of maintenance must be taken into account in the calculation. From the first year, it may be necessary to change the tires or to have the brakes or shock absorbers serviced. Very quickly, the amount of these expenses can increase and represent a substantial budget visit https://www.faragomotors.net/.
To assess the difference, it is better to add up all these items and calculate the amount to be spent on average each month.
The different possible financings
To choose the method of financing your vehicle, the budget criterion should not be the only one to take into account. It is also necessary to think about the use of the vehicle. The financing adapted to a big wheeler will not be the same as that recommended for a person simply using his car for short trips in town. There is also the question of ownership: some people are attached to owning their own vehicle, while others attach much less importance to it. Finally, while some motorists like to regularly change vehicles for others, driving the same car for more than ten years is not a problem. For all these reasons, defining your driver profile is the first step before choosing your method of financing.
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Cash purchase
When a person has the necessary budget to acquire a vehicle, the logical solution seems to be the cash purchase. No need to take out a credit and thus have additional costs to pay. “ It is not necessarily the wisest choice , warns Céline Genzwurker-Kastner, legal director of the Automobile club association (ACA).
Buying on credit
Another solution: take out consumer credit. “ This option is particularly suitable for heavy riders who need a vehicle that belongs to them right away.“, advises Céline Genzwurker-Kastner. Before starting the process, it is important to calculate the amount of monthly payments that the household budget is able to support. Then, there are two different forms of credit: classic consumer credit or restricted credit. It’s a safety net.
To obtain this type of credit, it is necessary to present some supporting documents such as the invoice or the order form for the car. Reimbursement of monthly payments begins only upon receipt of the car.
Compared to leasing, monthly loan payments are generally lower.
Lease with option to buy
Rental with option to purchase (LOA), also called leasing, allows you to rent a new car in return for the payment of a “monthly rent”, identical every month. It is necessary to be vigilant with regard to the number of authorized kilometers. If exceeded, penalties will have to be paid. It is also mandatory to return the loaned vehicle in very good condition. The slightest scratch can be charged heavily.
The lease term is between two and six years. On the due date, there are two possibilities: buy the car at the price agreed in advance or rent a new one. The total cost of the operation is higher than that of a loan.
Long-term rental
Long-term rental (LDD) consists, as its name suggests, of renting a vehicle for a period determined in advance. It is generally between one and six years.
Balloon credit
The balloon credit is a mix between the LOA and the assigned credit. Initially, the principle is the same as for the LOA. The duration of the rental and the purchase price are determined from the start. This credit can be spread over a period of between one and four years. An investment that cannot be recovered at the end of the loan. The difference with the LOA is at the level of the monthly repayment. You do not pay rent but repay monthly payments. Their amount is lower than that of a classic car loan because you only pay the interest on the loan. When the loan period is over, several solutions are offered. The motorist can choose to change vehicle and start again on balloon credit. He also has the opportunity to renew the lease or to resell the vehicle himself to repay the loan, provided that the selling price is sufficiently attractive.
Last option: buy back the vehicle at the price fixed from the start in the contract. In most cases, the redemption value requested is higher than that for the LOA and does not reflect the real value of the vehicle. He also has the opportunity to renew the lease or to resell the vehicle himself to repay the loan, provided that the selling price is sufficiently attractive. Last option: buy back the vehicle at the price fixed from the start in the contract. In most cases, the redemption value requested is higher than that for the LOA and does not reflect the real value of the vehicle.
Cars Lover
He also has the opportunity to renew the lease or to resell the vehicle himself to repay the loan, provided that the selling price is sufficiently attractive. Last option: buy back the vehicle at the price fixed from the start in the contract. In most cases, the redemption value requested is higher than that for the LOA and does not reflect the real value of the vehicle. buy back the vehicle at the price fixed from the start in the contract. In most cases, the redemption value requested is higher than that for the LOA and does not reflect the real value of the vehicle.
buy back the vehicle at the price fixed from the start in the contract. In most cases, the redemption value requested is higher than that for the LOA and does not reflect the real value of the vehicle.
Manufacturers’ offers
Car manufacturers have their own financing solutions. By working in partnership with financial organizations, they provide packaged offers including both the price of the car, but also insurance and a subscription for the maintenance of the vehicle. It saves time because there is no procedure to perform. The advantage can also be financial since it is not uncommon to have a promotional offer with 0% credit linked to these packages. On the downside, these advantages reduce the margin of negotiation on the price of the vehicle.
