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Did you know? By taking an MTO-approved Beginner Driver Education Course at a driving school, G1 licence holders may qualify for a 4 months reduction in the 12-month minimum G1-licensing period as well as a potential reduction in car insurance premiums when buying new or used car either by financing, leasing or through bank car loan.
Car financing- Car financing can be availed through various sources. Dealership, banks and online companies are some of them. Another option for a car enthusiast is car leasing. It is a procedure by which an enthusiast can obtain the use of his desirable car against the payment of contractual, periodic and tax deductible payments. Actually, lease is contract between owner (lessor) and the user (lessee) for the hire of that car. This service is availed mostly by corporate firms, to get a deduction on their annual taxes.
Car financing is not a simple procedure but intertwined with uncertainties. This uncertainty leads to risk. A substantial amount of risk arises from insensible selection of compatible price ranges. A car outside our budget is a big risk to our credit worthiness. Experts suggest that the monthly repayment should not exceed 20% of our monthly earnings. We embrace a huge risk when we are not in a position to bargain on interest rates offered. This means a loss of substantial amount of money over time, due to high interest rates.
By availing a car loan, we may build on some equity but we may have to face certain limitations as well. The repayment schedule can lead to huge losses. For a loan of $100,000, repaid over fifty months and at 12% interest; we are repaying $150,000 at the end of repayment period. This means a further burden of $50,000 as interest accrued. However, if we can cut down on our spending and repay the above amount in forty installments; the loss due to interest accrued minimizes to $40,000. Thus, a proper repayment period has to be established before signing a financing deal. In case if you not able to repay your loan for a certain period due to financial constraints; you are in danger of losing your car. This is because of compounding effect of the interest. In order to prevent this compounding of the amount, you have to at least repay the interest accrued for that period.
When we are availing a car loan, we need to keep in mind various important considerations. One of the most important considerations is the total cost of ownership of car. The total cost ownership includes the price of car, registration fee, insurance, gas and maintenance. A genuinely good piece of advice will be to downsize and not supersize. A SUV may have caught your eye but the additional costs associated will only end up hurting you financially in the long term. In case, you face some financial difficulties, let your lender know the same. This will help you to work a repayment schedule. The hassles of availing a car finance plan might pressurize and destabilize your financial security. Such a situation requires some wisdom and cool head. Consumers who feel out of comfort zone should walk away and those who finance should do it only after due consideration.
