The subject of Car finance is a financial product comprises of various forms through which a person can acquire a car with any agreement but not paying lump sum payment. A person will purchase the car either for business purpose or for personal purpose. The business car finance is important from the view point that the owner can take tax benefits of the asset acquired, which is not the case when it is purchased in the individual name. A car is the costly thing which you cannot afford to purchase without borrowing, and this interest on borrowing is an allowable expense in business, if the financing is done in the name of business.
The funding for personal car finance is done by traditional retail banking sectors or a specialist car financing company. Some car manufacturer owns their own financing arms like Ford with Ford motor credit company. Personal loan finance is a complete subsector of car finance with different type of loan is available. It can be a straightforward car loan, hire purchase or a leasing agreement. As the car has high value different type of car financing is available, which enable different type of financing beyond unsecured loans.
The finance is arranged by the dealer itself or a separate financial broke who will work as a commission agent. They usually made tie ups with the dealer to refer their name if the customer asks for financing arrangement. The funding supplier will retain the ownership of the car till the contract is completed. It is true that shopping for a car loan is not as much a fun as shopping for a car. But it is equally important.
So if you are looking for a car loan in the market few things should be considered by you before going for the actual purchase like look into your credit score by asking the statement from the credit bureaus. This will help you to know about you credit score, and if there are missing entries in the report like the paid off debt is still showing unpaid then get it corrected quickly else you will end up paying higher interest rate.
It is advisable to use EMI loan calculator to make monthly budget of your pay-out so that you can plan your expenses based on your income. This is more important to keep your credit high always. Some experts’ advice that you should get your loan approved before stepping into the dealers office. It is also not advisable to take loan from the car dealer itself as you would never know how much profit margin or fees they are adding to your loan amount. So verify the rates and interest amount from various lenders. If you have been approved by other lender then you can also use it a bargaining chip and get the cheaper rate loan.
So when you are really looking for a new car don’t go for a personal financing but make it business investment so that you will be able to get the lower rate unsecured loan as the credit of business is always more than the individual. Also you can claim all the expenses related to car purchase as your business expense, you can get the tax benefit for the business car as long as the useful life of vehicle does not end.