Many households look towards owning a car even though many alternatives like cab aggregators and public transport are available. In this light, the most common approach to buying a car is by availing a car loan. However, here are a few alternatives in going a step closer to your dream car without having to rely solely on a car loan.
- Use savings to buy the car – This is the cheapest option as there are no hassles of documentation, EMI payments etc. By making full payment, the ownership vests immediately with the buyer who can proceed to add any other fittings to the car without waiting for clearance from the lender.
- Hire Purchase–It is normally arranged by a car dealer, which involves an initial payment of 10% of the car value and the car’s ownership gets transferred only after the full amount is paid which could also turn out costlier in the long run.
- Personal Contract Purchase– Here the car is hired for a fixed amount per hour or day and the car can be used as one pleases. While the advantages are many, the most important difference is that ownership is never transferred to the user and any use in excess of agreed upon mileage will have to be paid at additional rates while repairs and maintenance will add to the costs.
- Leasing – Use and return with fixed monthly lease charges in this case. Here again ownership remains with the owner who will look to make an extra buck with the leasing, though servicing and maintenance expenses remain with the owner.
- Peer to Peer Loans – It is an arrangement by which individuals are allowed to borrow or lend to each other without involving a lending institution.
- Top-Ups for Car Loans – If all of the above points didn’t quite make a mark on you, you might just have been looking for this! A Top-up for Car loan is an ideal choice for buyers who have other loans running, and still wish to buy a car. Top ups for car loan have risen to popularity as they come at lower rate of interests and you can easily pay affordable EMIs along with paying off your home loan, etc. Also, unlike in case of car loan, in a top up for car loan, you do need to hypothecate your car to get the loan. Moreover, top up loans for cars are processed a lot faster than car loans.
Having indicated the alternatives to obtaining a car loan, it should also be remembered that most borrowers shop for the best deal at their disposal; and to attract a borrower for a fully secured car loan, banks often go to various extents including financing for the full cost of the car or even reducing interest rates to the minimum. If you are fixedon your budget adhering to your existing loans, rather than opting for a car loan, top-ups for car loan can come to your aid.
So, now that you’ve been spoilt with choices on how to buy your dream car, it is time to make the best pick as per your suitability!