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A car loan for the car of your dreams!
A car is an important and major expense in your life. The money for this purchase can be borrowed through a car loan. There are various options when it comes to borrowing money when purchasing a car. Kredietverstrakers.com lists all the important information for you.
What are the options in terms of a car loan?
When you want to purchase a car, you have to pay a lot of money, especially when it comes to a new car. You don’t just buy a car quickly, so it’s important to think carefully about financing. When you decide to borrow, you can choose from a number of options, namely: personal loan, revolving credit or hire purchase. We are happy to explain the options to you. Please note: a car loan costs money. So you always pay more than the car costs.
You have security with a personal loan. The loan amount, interest and duration are fixed, so you always know where you stand. In contrast to a revolving credit, you cannot re-take the repaid amounts with a personal loan. You only use the loan for the purchase of the car and you are not tempted to use the loan for other purchases.
With a revolving credit you determine how long you will be paying off the car loan. It is a flexible form of loan in which the interest, loan amount and term are not fixed. You agree on a credit limit and decide yourself when and how often you can withdraw money up to the maximum credit limit. This loan is most suitable when you need more spending space for a longer period of time or when you do not know exactly how much money you need. With a revolving credit, you run the chance that you are still paying when the car is due for replacement.
When you purchase a car, you can also choose to arrange financing directly with the car dealer. One of the options that dealers offer is called ‘hire purchase’. With this form of borrowing you rent the car until you have fulfilled all financial obligations. So you only become the owner when you have paid for the car in full. In the event of a purchase at the car dealer, you first pay a deposit. You sign a lease-purchase contract in which the agreements state the amount of repayments, interest and the term. Lease purchase is a form of a car loan in which there is no review at the BKR. The loan can be easily and quickly taken out at a car dealer. You make a down payment and provide the required information: a copy of a valid Dutch driving license and a copy of a payslip or bank statement for the last month. The disadvantage is that when you are faced with financial setbacks and are no longer able to meet the financial obligations, you will lose the car. After all, you only become the owner when the entire sum has been paid. The seller has the right to reclaim the car if the buyer has paid less than 75% of the lump sum and further payments are no longer made by the buyer. In that case you have to return the car and you can no longer derive any rights from the paid installments.
Other financing options
In addition to taking out a car loan, there are even more options for financing your dream car. For example, you can choose to save for the car or lease it.
Saving for a car sounds like a logical choice. You are the direct owner of the car and do not have to worry about the payment. But you have to save a large amount of money, which you might spend a long time on. Even when you already have enough savings, the purchase of a car ensures a large ‘bite’ from your savings account. As a result, you may have less money left over for other, unforeseen expenses.
Not buy, but lease
If you do not want to buy, you can choose to lease the car. With this form of financing you pay a fixed amount to the leasing company every month. In exchange, you have a car at your disposal. The costs for maintenance, road tax and insurance, for example, are often included. Be well informed when you are considering entering into a lease contract, just like with borrowing, there are snags covered with leasing. For example, some leasing companies offer a lower monthly amount, with the result that a residual debt remains at the end of the contract. You can then pay off this debt with the residual value of your car, but if the residual value is lower than the residual debt, you have to pay the rest yourself. The residual value can be adversely affected because, for example, you have driven more kilometers or if there are (minor) damages on the car.
Get well informed
When you are finally in possession of your dream car, you do not want to be left with a towering debt that is difficult for you to get rid of. Therefore, be well informed when taking out a car loan. It is wise to investigate which form of financing best suits your personal situation. Don’t let yourself be tempted too quickly by car dealers who want to offer you an attractive deal. It may seem perfect at first glance, but if you are left with a residual debt or something changes in your financial situation, you may have problems with the repayment. So take a good look at whether you can bear the costs for a loan.