All of the costs involved with buying a new car can often make us wonder what we’ve gotten ourselves into. When buying a car, one of the biggest expenses will be your loan or car finance.
The car itself
If you can afford to buy your new car outright, then that’s great! However, for many people, taking out a car loan is a much more realistic option.
There are several different types of loans available, including personal loans, secured loans and commercial loans.
- Personal loans are unsecured and you do not need to provide collateral as a guarantee that you will pay back the money you borrow. The lender will not take possession of any goods, property or assets in the event that you are unable to repay the loan.
- Secured loans are when a borrower pledges some type of valuable asset as collateral on a loan. If for some reason they cannot make the agreed-upon payments, then the lender will obtain ownership of this asset
- Commercial loans can be used to purchase cars for commercial purposes, such as company fleets. These types of loans are usually more expensive than personal car finance or even secured car finance, but they will help you get the best interest rates possible when securing the loan against your business assets
It’s a good idea to shop around for the best rate, and you can compare Driva car finance options easily online.
Interest and lender fees
With all car loans, you’ll need to make monthly repayments (plus interest and fees) to your lender to pay back the loan. As interest rates vary between lenders, it’s important to shop around and find a lender who offers the best deal for you.
In addition to the interest rate on your loan, lenders will charge additional fees, such as loan establishment fees and legal fees.
You also need to think about how long it will take you to repay your car finance loan. In many cases, car loans can have a repayment period of up to five years or more depending on how much the loan is for and what the terms are.
Once you’ve managed to get past the borrowing bit, there are still plenty of other costs involved with buying a new car.
If you’re buying the car for business purposes,, then that means you can write off your next car as a business expense. If you don’t have an office to work from, then you might need to consider hiring a virtual office.
If the car is registered in your name and it’s going to be used as a business expense, then you’ll also need to ensure it as such. In some cases, taking out a commercial vehicle policy will be cheaper than insuring your new car privately.
Other ongoing costs you’ll need to consider, whether the car is for a commercial or personal purpose, include insurance, registration, petrol, roadside assistance, toll road costs and repairs and maintenance.