Car finance is a very important decision that you should think of especially if you are working on a tight budget. Before going for vehicle finance, there are many things that you need to consider. In the United States, they have something called The Lemon Law which states that a car lot cannot sell a car that frequently breaks down. This is a most commonly forgotten fact about vehicle finance.
Realistic Budget - Wouldn't it be great if a lender gave you enough money to buy the car you have always wanted and you never had to pay it back? In reality of course any money you borrow you will have to pay back plus interest. This is why it is so important you don't borrow more money than you can afford to pay back again within an agreed time period. Borrowing above your means can cause a lot of stress and could lead you in financial hot water. Set yourself a realistic budget when you are looking at purchasing a car on finance and make sure you don't get tempted by any 'amazing' loan offers.
No full turnover agreements. There is generally no requirement for you to factor (and pay fees) on every single invoice you issue. You decide which invoices to sell.
Having debts hung around your neck is never fun. Even if you can keep up with your payments the thought of owing so much can be quite stressful. Nobody can predict what financial position you will be in a few years from now (what happens if you can't work or get fired?) and overstretching yourself on a financing plan today could put you in a terrible position tomorrow. Bad credit history can follow you around for a long time and affect you when you try to get a mortgage or bigger loans down the line.
So, let's have a look at some figures for auto finance that are commonly available right now. The national rate in the United States to finance a new auto over a 36 month period is 6.89%. Over a period of 48 months this rises to 7.12%. And for 5 years, it's up to 7.32%. These figures are for a new auto. For used, you have to entertain slightly free online financial money advice higher numbers - 36 months for example is 7.5% annually.
You could save a lot of money on your monthly repayments if you can afford to put down a deposit when you buy cars on finance. This option is available (and often required) on the finance offered by dealers. Once you have decided what type of car you want you should aim to save up at least 10% of the sale price.
Apart from cash, you get enormous peace of mind knowing you have the ability to meet your commitments - to buy inventory, to build more sales and to make more money - at your fingertips.