With car loans becoming more prevalent and expensive, the article explores the various financing options available to car buyers. It highlights the importance of saving for a car purchase to avoid high interest rates and emphasizes the significant depreciation of a new car.
Cash is king but most people will need to borrow to fund a new car purchase, so what are the merits of the different options? Motor dealers will be looking to tempt buyers with new car deals in January but how you finance the deal can come at significantly different cost. Photograph: iStock Thinking about buying a car? You can expect generous incentives in the coming weeks as dealers look to tempt you with a spanking new 251 registration plate, or any car newer than yours.
As a country, we are taking out more loans in bigger amounts to buy cars, research shows. Some 17,794 car loans valued at €224 million were taken out between April and June this year, according to Banking and Payments Federation figures. In terms of the number of loans, that’s up 12.4 per cent year on year. The average value of those car loans was €12,605, a 19 per cent increase year on year. And that’s just bank loans: the figures don’t include popular car financing options such as leasing and hire purchase deals.Buy now, pay later: Many don’t realise that buying clothes with services like Klarna is taking out a loan A car is the second biggest financial transaction most people make. How you pay for it can have a big impact on your day-to-day finances.(Mabs). Financing a car from your savings is the cheapest way to pay, with no interest or late payment fees adding to the cost. “Save for your car and do it in a deposit account with a good interest rate, because that’s the cheapest option,” says Karl Cronin of Mabs. “If you are borrowing for a car this time, think ahead to the next time you will change your car – can you start putting aside some money now so that you won’t have to borrow so much?” says Cronin.A new car will lose between 15 and 35 per cent of its value in its first year, and up to 50 per cent over three years, according t
CAR LOANS FINANCE DEPRECIATION SAVINGS NEW CAR
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