When you need a new vehicle, there are now a number of options for helping you buy it. The classic option is paying cash or writing a check for a new or replacement vehicle. If you have the cash to pay for the vehicle, your credit rating doesn’t matter. The problem is that if you have bad credit, you probably don’t have the cash to buy a new vehicle. Let’s look at some of the other alternatives for those who need a new car.
A Car Loan
A car loan is one of the most common ways of financing a vehicle. You have set monthly payments. When you make all the payments, you own the car outright. This seems like an expensive choice if you have bad credit. However, this car loan company from Ottawa, Canada offer reasonable car payments if you meet their requirements. One of the benefits of getting a car loan is that you can buy any vehicle you like, as long as you can afford it. New or used, minivan or sports car, it is your choice. You don’t have to pay a penalty if you drive the car 20,000 miles in the year. You can choose your auto insurer and who repairs the vehicle.
A Car Lease
A car lease comes with a lower monthly payment than a car loan, but that’s because you aren’t going to own the car at the end of the lease. Instead, you’re paying for its depreciation and your wear and tear on the vehicle. The downsides of leasing include the risk of a hefty charge if you’ve driven more than expected and the fact that you never get rid of your car payment. The upside is that you can switch cars at the end of the lease without penalty. Depending on the leasing company, you may be able to upgrade to a larger car if you have kids without any penalty. And you might be able to downsize to a cheaper car if your finances take a hit.Depending on the lease terms, you may build equity in the vehicle or have the option to buy it at the end of the lease.
A Car Subscription
A car subscription is similar to a car lease in that you’re paying a monthly fee to drive the vehicle of your choice. The car subscription fee includes not just the car payment but insurance, taxes, maintenance and licensing. It offers simplicity and convenience. You can often switch readily between vehicles in the same class. You only have to pay for gas, tolls and the insurance deductible if there is an accident. If you move often, the ability to turn in a vehicle at one place and pick up the replacement at your destination is incredibly convenient.
There are downsides to the car subscription First, this is the most expensive way to drive away in a vehicle. You could negotiate a lower insurance premium than the one most car subscription services charge you You’re never going to have equity in the vehicle, and they’re pushing you to rent a luxury vehicle. Car subscriptions often limit you to the vehicles that the service provides. For example, Volvo’s program only lets you drive Volvo cars. And like car leases, you can be hit with mileage overages or vehicle damage. These programs can be compared to car rentals in how much they end up costing you per month. It is cheaper to take out a car loan that will end at some point.
