Sometimes it is said that without a car – like without hands. We want to drive in a way where we feel safe and comfortable. Some prefer economical, some prefer stylish. It is true that sometimes our own savings are not enough to buy a car. But you also want to borrow well.
Before deciding which option to choose, it is important to evaluate your borrowing options responsibly.
When borrowing a car
We usually think of leasing first, because if all the terms of the contract are met, the leasing interest is lower than the consumer credit. However, whichever option is best for you depends largely on the car you are going to buy and your financial ability.
It is estimated that if you buy a car up to 7 thousand. For example, take consumer credit. However, if you choose a car that costs 7-8 thousand. or more, you are likely to pay more for a leasing contract.
When you buy with leasing you will need savings – the down payment is at least 10%. There is no need for a down payment on consumer credit, so you can borrow the entire amount and choose the vehicle of any condition or age.
The myth is that only a brand new car can be purchased from the salon. In both cases, both leasing and consumer credit, you can buy a car from any company or individual. Only in the case of leasing, the car must be at least 13 years old at the end of the contract.
You do not need to mortgage your car in both cases
But with a consumer credit, you get the money straight into your account, you pay it to the seller, and you own the car right away. Leasing will be a little different. Until the last installment of your car – that is, throughout the leasing period – your purchase will be owned by the leasing company. This also leads to other conditions – the car must be insured with motor vehicle insurance, have proper maintenance and immediately alert the credit provider in the event of an accident.
Instead, you can take out consumer credit yourself. Purchasing credit premium insurance will help you be calmer if you lose your income unexpectedly – a credit insurance company will pay for you. In the case of leasing, such insurance does not apply. If the customer is unable to pay on time, the payment schedule may be changed. However, if the situation is not resolved, the leased car remains the property of the leasing company. And if the opposite happens and your income increases, you can always repay your consumer credit early without any price increase.
Camille from Vilnius looked at an older and hopeful car. Let’s calculate how much it should borrow and what its liabilities would be:
- The first car that Kamile liked – a 10-year-old Ford for $ 7,000. dollars. She will not be able to enter into a leasing contract because the car is too old. But consumer credit terms are great for the girl. It has 3 thousand. USD savings. So you can borrow 4 thousand. for a period of five years. The monthly payment would be 90 dollars. Camille will be able to apply for a consumer credit online. If its income is sufficient, the money will soon reach the account. The girl will be able to buy the car and immediately become the owner.
- Second car – newer and more expensive, five-year-old Audi for 15 thousand. dollars. And for this purchase, Camille can use $ 3,000. USD savings. But she will need to borrow another $ 12,000. dollars. If she took a consumer credit for five years, she would pay $ 267 a month. With a five-year leasing contract, she would pay $ 215 a month, half the cost of a consumer credit. It is true that this amount would probably be used to cover motor car insurance, which is mandatory at the time of leasing. However, when deciding on a newer car, Kamille will probably opt for leasing. Because premiums will have about the same amount as a consumer credit, it will also have Casco insurance.
A consumer credit is eligible when
- You have chosen an older car for which you plan to spend about 4-5 thousand. dollars.
- you do not want to have casco insurance
- you have no down payment
- you want to contract online
- you want to become a car owner right away