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Family Car Finance
You and your family have been considering upgrading your family car for a while now but the challenging part is getting the finances. With taking care of your kids and ensuring their fees is paid, they are fed and have all they need, in the end most times you may not have much finances to spare. Fortunately, there are many family car finance options that you can turn to for assistance. In this article, we will be sharing what those are.
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Family Car Finance Options
When comparing your options, be on the lookout for the following.
- Interest rates. The interest rate charged on your loan determines how much you will end up paying at the end of the loan term. Always be aware of the rate you are being offered.
- Loan term. Car loan terms can be set for short periods of time such as 6 months to a year or longer periods such as 5 years and above. Going for a shorter term means your interest rate will be lower but monthly repayments will be higher whereas for longer terms, your interest rate will be more but less monthly repayments.
- Minimum repayments. It is important for you to be aware of what your minimum repayments are for your loan and whether it fits well with your income and budget.
- Fees you will be charged. There are lenders who charge a monthly account fee on top of your loan or early repayment fee. Make sure you are aware of any fees that are applicable to avoid having to pay more money than you had expected.
A secured car loan is a type of loan where the vehicle you purchase is used as collateral. If you don’t make your repayments as agreed, then the lender has the right to repossess the vehicle. The lender will then sell the vehicle to recover the cost of the loan. The interest rates for this loan tends to be lower because it’s less risky for the lender. Lenders prefer that the vehicle you purchase should be in good condition hence prefer if the vehicle is new but that doesn’t mean you can’t find a secured car loan for used cars.
When comparing the different secured car loan options, keep an eye out for fees, loan terms, minimum and maximum loan amount, whether you can give additional repayments, interest rate and other features as they tend to differ with different lenders
A used car loan is a type of personal loan that enables you to finance a second hand car that’s over a certain age. Used car financing comes in two ways, which is secured or unsecured. When it comes to the age of the car, different lenders have different preferences plus it also depends on the type of loan you are taking out. Most will require that the car being purchased is under seven years old.
Personal loans allow you to borrow a set amount of money to pay or purchase something or to consolidate a debt. Personal loans are mostly used to pay for home renovations, travel and huge purchases such as boats, cars etc. There are two types of personal loans; unsecured and secured personal loans. Secured personal loans need an asset to act as security and its interest rates are lower compared to unsecured personal loans which don’t require collateral.
New car loans are mostly secured loans where a financier has the right to repossess the vehicle if you default on your loan. A new car loan will enable you to finance a new car that is typically under a certain age. New car loans are generally reserved for vehicles up to five years old with some lenders restricting the age limit to 3 years. Remember that you and your car will have to pass the eligibility criteria first before you secure the loan. The benefit of new car loans is that you can purchase a car of your choice and the interest rates are more friendly.
With unsecured car loans, the lender doesn’t need any of your assets as security for the loan. Therefore, if you don’t make your repayments, there is no asset for the lender to repossess. This means that this loan is very risky especially for the lender hence why interest rates are usually high. You will also have a lower borrowing limit and a shorter loan repayment term. You will take ownership of the car at the time of the purchase and repay the loan to the lender over the agreed terms. This is a good option if you are looking to purchase an older or low value vehicle.
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