Is car finance, good finance?
Car finance can be a good way of funding your next car.
Car finance can put a better quality car within your reach. Often providing better reliability and economy.
When purchasing a car using a finance plan, a number of important factors are often overlooked by banks and brokers.
It’s all very well having a good knowledge of financing, however, when the finance is for the purchase of a car it’s important that the finance plan suits the situation of the customer.
Factors such as:-
- How much of the car is being financed
- Period of the loan against period of ownership
- Flexibility of the loan
- Type of loan selected
In example; if the customer intends to keep the car for 2 years but finances 100% of the purchase price over 5 years, it’s possible that they could be in “negative equity”, where the car is worth less than the settlement of the loan, at the time they wish to change.
Good dealers ensure the customer is aware of any potential issues like this and have the ability to show them affordable alternatives.
A recent survey by Stoneacre Financial Services revealed that car buyers prefer to use the supplying dealer, when securing finance for their new car.*
The survey also revealed that customers prefer to buy a quality used car from an independently reviewed dealer*, who gave them good advice and a quick decision on their finance application.
So, is car finance, good finance? I think it is, but only when all factors are taken into account, so an informed decision can be made.
*Source: Stoneacre Financial Services – Finance Survey, AM Online.