The
opening of the economy has brought car buyers a plethora of models to
choose from. Having decided the car to buy, buyers also have to decide
whether to fund it from their own resources or through car finance.
Car finance schemes have evolved with changing needs and market solutions.
Aggressive marketing, packaging, easy eligibility, fast turnaround of
applications, have all contributed to making car finance a preferred option
to own funds.
However, a buyer needs to understand some ground rules to shift through
all the options and find one that suits him best. We bust some jargon
and bring you the basics of car finance in this special guide.
You
have finally decided on which car to buy. Congratulations, but you have
covered only half the distance you need to travel to own your dream car.
The second half, which is probably the more difficult patch, is about
to begin with the question "How are you going to pay for it?"
Well, writing out a cheque for the value of the car is the easiest solution.
But that is the preserve of a select few and for most of us, availing
of a finance scheme to purchase the car is the best option. Even for those
who are able to make a full payment should check a financing option before
taking the final decision.
The current sluggish market conditions, coupled with the lowering of interest
rates, have made the car finance market extremely competitive. Finance
companies, dealers and manufacturers are wooing buyers with "special offers",
discounts, "0% finance", low interest rates. If you are looking for a
great deal, the time is now!
Now that you have decided to avail a finance scheme for your car, the
next step is to select the scheme that suits you the best. Your newspaper
is full of tempting offers from a host of finance companies each luring
you with a basket of freebies. On top of that are claims and counterclaims
about their interest rates and down-payments. So how do you decide which
is the best finance option for you? To select the best option you need
to first familiarize yourself with the mechanics of this market after
which, you will be in a better position to make up your mind. In the sections
that follow, I will try to acquaint you with the basics of car finance,
the various terms and some insights into how the schemes work.
January 2002