Getting a new car is an exciting time. Whether it’s brand new, or merely a used car that’s new to the buyer, picking up a new car is fun! However, before the joy of driving a new car for its intended purpose can be had, there’s often a lot of transactions that need to occur.
Owning a car is expensive. These vehicles are large expensive purchases which will often require the use of credit in order to purchase them. In addition, they are expensive to maintain. Repairs and gas are certainly issues, but people often forget about the costs of warranties or insurance! Quite simply, there’s a lot of financial work that may need to be done to get that new car. What follows in this article are many of the financial services that people will need to take advantage of.
Most people who need to purchase a car aren’t able to come up with the lump sum of the vehicle out of pocket. Cars are very expensive afterall! Not everyone has between $5,000 and $100,000 dollars sitting around and waiting to be spent on a car.
Dealer financing is an offer from the dealership (or a third party partner that works with them) to break the costs of the vehicle to monthly payments. Dealerships often offer excellent interest rates due to the fact that they are already making a profit on the vehicle. They are more than willing to make a small profit on the vehicle, doubled by a small profit on the financing as well.
There can be a difference between financing and between a car loan. Typically car loans come from a bank. They are often happy to provide a loan to their customers in a fashion that lets them get a new car. Interest rates on car loans from financial institutions can be a bit higher than they are when getting dealer financing. The bank isn’t making money on the vehicle after all. It needs to cover the potential for floss on the default of a loan.
One of the most important transactions to make during the purchase process of a new vehicle is getting insurance. Many people already have car insurance for a different vehicle, and merely wish to stay with their current provider. Most providers will simply alter policies to account for the new vehicle.
The good news is that new vehicles often have lower rates thanks to extreme safety features in modern vehicles. Insurance should be planned out before purchase so that it can go into effect immediately when driving off the lot!
Most new cars come with a base warranty. Typically these last for 3 to 5 years depending on which part of the vehicle is involved. Companies don’t mind offering these, because they are well aware that the vehicle is in good condition and shouldn’t have any problem during that time.
Where warranties become more expensive is when the buyer of a new car decides to get an extended warranty. This extends the warranty of the vehicle for another few years. The cost of the warranty varies by car, but it can be quite expensive. However, it’s worth it when there’s the chance that an expensive repair may be needed.
The final type of extra warranty is one offered up for used cars. When used cars are bought from a used car dealer, they may offer up a warranty. Six months is quite common. Additional warranties can be bought from the dealership, or more likely from a third party company that has to inspect the vehicle to sign off on a warranty.