How to Finance a Car
Financing a car is quite not as easy as it seems? Car is not an investment rather a liability has its value depreciates quickly than expected. The parts of the car start wearing out and repairing charge starts going higher which makes more difficult to be managed over time.
A Toyota vehicle worth of $500000 is bought and leased out at the rate of $25000 per month, it becomes difficult for the person been leased to by the time the vehicle starts developing faults. This makes it difficult for him to pay the money back in a month. If this continues for sometimes, the money used to finance the car might never be regained.
Car loan calculator
Some financing car calculator is for the purpose of making profits. Before going into car finance, there are some recommendations that should be followed:
- Understand the amount of capital at hand before going into getting in terms of how to finance a car. Will this capital be enough for the car? What will be my profit if am to lease this particular car out at the rate it worth, these are questions that should be asked from people that know much about cars. There are many cars that worth $10000, $15000, $25000, $50000, $10000 and so on but remember that the higher your cost of capital for purchasing a car, the higher the profit and probably the lower the liability because the higher the worth of the vehicle, the lower the chance of it losing its durability quickly. Remember that your capital includes not only the amount you purchased the car, it also includes all the money you used in purchasing fuel to move it from the dealing point to your destination, it also includes the money you used in getting the vehicle papers like particulars, insuring the car for any damages. All these things must be considered in finding the car.
- If you do not have enough capital, you can try the debt financing method. This type of finance helps you to get an opportunity to finance a car. How? Gets to the dealer, ask for the particular kind of car you want, ask him you want to pay part of the money as you did not have enough money for that vehicle. To do this, make sure the liability on the vehicle is very low as this may course the problem for you when it starts wearing out and losing its value. Agree on the particular amount to be paid monthly. For example, if the car worth $900000, make sure you have up to $700000 to pay for it at that particular time and pay the rest on installment. Make sure also that the vehicle has a warranty of at least 12months.
- If you had bought the car using the debt financing, you should be able to lease it out to the person that needs your car at a higher rate more than the amount to be paid to the dealer on installments. If you are supposed to be paying the dealer $25000 on installment monthly for four months, you can lease your car out on $35000 monthly. This would help you get the debt paid in no time without the vehicle losing its value since it will certainly be up to a year before the vehicle starts losing its value.
- Make sure that taxes, fees, and extras are being paid on time before any problem ensues. If you buy a car on installment basis and you have refused to pay the tax, when the government officials get you, it might be difficult for you at this time to pay for the installments again as the money would be used to pay for taxes. Pay necessary fees like the particulars before leaving the dealer’s place as dealers love it a lot when you pay necessary dues and fees by not been concerned about the car alone but also raise his hope that you would surely pay the debts back in no time.
- Other things to be considered in financing a car is to get the insurance paid on it. Get the GAP insurance paid. This is car dealers and lenders sell you to cover the gap between what insurance companies think is the worth of the vehicle and what you actually owe on the vehicle.
Put these recommendations into use when you think about how to finance a car and problem faced with liabilities would be minimal.