Things to Learn about Car Dealer Financing
It is a fact that car finance has become a huge business nowadays. It is observed that a large number of new and used car buyers in any country are using a finance of some sort when people buy their vehicles. The various forms of finance that people use nowadays instead of buying cars using their own cash, are in the forms of bank loans, finance from dealership, leasing, credit card, and other forms of finance.
According to various manufacturers and dealers of vehicles, around 40% to 87% of car purchases nowadays are being made on finance of some kind, making people join the bandwagon of car finance so that they can get the car they desire within the monthly expense limits that they can afford.
With a very straightforward concept of car finance, where a person can buy a car in payments at small monthly amount that is affordable over a period of time instead of paying upfront in lesser amount, is proven still appealing to the customer. It is therefore important that a customer would understand this scenario especially if the person will not read the fine prints of car finance agreements and the consequences of what they are signing up for.
In order to make a careful decision about the car finance, it is advisable that you will go over the full term of the finance.
Today, for many individuals, it has become very convenient for them to go through the dealership when financing their cars. Dealers usually have national offers and programs that can make financing of cars very attractive.
To be mentioned here are the two main types of car finance that car dealers usually offer for private car customers, and these are the hire purchase and the personal contract purchase.
A hire purchase or HP is similar to a mortgage on a house where one will pay upfront a deposit, and pay the rest over a certain period of agreed time like 18 to 60 months. The car becomes officially yours once you have made the full and final payment based on the agreed period.
There are some benefits you can get in using the hire purchase plan. This mode of finance is simple with an arrangement of paying a deposit at amount you can choose, and decide on the terms or number of payments what you can afford.
The other scheme is PCP or personal contract purchase, and is also very famous although more complicated than the previous scheme mentioned PCP. Since the PCP is better for the dealer side, they will most likely push you towards this kind of scheme.