Indeed, owning a car is not a joke. It requires financial commitment above all other purchases. Some people take years before getting their dream car, while others choose to get a vehicle through finance solutions.
Regardless of their choice, none of this was wrong. Those people did what they thought was wise for their situation. Yet, how would you know which one is right for you?
First of all, you would not be here if you decide to save up and buy your dream car in later years. For sure, what you want to know is the latter choice others often chose—vehicle finance solutions.
This option means you are borrowing money to get the car you want to buy. You have two choices if you choose this option, either leasing or financing the vehicle. Whichever you choose between the two, listed below are what you need to keep in mind.
Things to Consider Before Choosing Either of Two Options
Whatever choice you choose, it is not easy to make since you would have to borrow money from others. That is why you have to look at your financial situation to see if you have enough income to meet your monthly expenses. To do this, you might want to use an excel sheet to make the computation a lot easier. Once done, be sure you do consider the following.
Know-How Much You Could Afford
As always, when you want to buy something, you have to determine if you could afford to pay for it. Think about whether it suits your monthly income or not. After that, you would know how many months you need to pay the item in full.
That same goes if you decided to hire or purchase a car in Singapore through finance solutions. The only difference is that you would be able to pay for it full sooner and return what you have borrowed from the finance companies at later dates.
Obtain a Copy of Your Credit Report
Once you get the gist of how much you could pay and how much you need to borrow, that is the time when you need to check your credit report.
This document is just a summary of how you handle your finances and what payment you have made so far. You could also expect to see some reports from lenders if you have borrowed some money before.
If you have no idea where to get your credit report, you could go to either one of these three offices. They are open from 9 a.m. to 6 p.m.
● Credit Bureau (Singapore) Office
● SingPost Branches Islandwide
● CrimsonLogic Service Bureau
Before you could get a copy of your credit report, you have to pay at least S$6 per copy. So, make sure you prepare that amount when going into one of these offices.
Have a Guarantor (Optional)
Right after you obtain a copy of your credit report and found out you have a poor credit score, that is the time you need to look for a guarantor. It is a person who you trust the most and would be willing to pay your loan on your behalf.
In some cases, you also need a guarantor, even if you have a good credit score. The reason is that some finance companies in Singapore require you to have one before you could apply for their loan.
Therefore, before you sign up for any vehicle finance solutions, verify with them if you indeed need a guarantor to sign along with you in the contract. If they said yes, ask your family or friends to become your guarantor.
When considering these three things above, make sure you take your time. Think about things thoroughly before deciding anything. That helps you not to regret your choice later on.
Should You Opt for Finance Solutions to Get Your Dream Vehicle?
At this point, you probably have prepared to choose this option. You already know how much money you could pay for and need to borrow from the finance company. The only thing left is how would you obtain the vehicle finance solutions. Is it through direct lending or car dealership financing? Let’s figure out the difference between the two below.
It happens when you borrow money directly from finance companies in Singapore, and you agreed to pay it back at later dates. The due date depends on how much income you make in a month and how much money you need to borrow.
If you choose this option, you could enjoy two advantages, do a comparison shop and get to know the credit terms in advance. Of course, you could only do that once you obtain pre-approval vehicle finance solutions.
Once you have it, it would be easier for you to negotiate with the car dealer. You could let them know how many months you could pay for the rest of the amount and how much you could pay each month.
If that did not work out with the first car dealer, keep looking and use the pre-approval finance vehicle finance solutions you have. Or you could ask the finance company to adjust it, but of course, make sure you comply with the changes they made.
For example, you would be paying a higher percentage of the down payment than your previous agreement. That way, the turnaround time of your loan would be much shorter.
Car Dealership Financing
On the other hand, this option only happens when you and the car dealer agree on a contract. That means you are willing to pay for the price over a timeframe, including its interest. After signing it, that is the only time the car dealer would go to the finance company so they would be the one collecting your payments.
The advantage of this option is that the car dealer would offer you some special programmes under the manufacturers. For example, paying a large down payment and giving back the rest in a short time, vice versa.
However, this option may require you to have a good credit score. So, kindly check with your prospect car dealer if you indeed need one.
Before moving to the next part of the article, you have to think about this part thoroughly. See which option of vehicle finance solutions is more favourable to you. Whatever you choose, proceed to that option below. You would find out what things you need to do before engaging in either one of the two.
Things To Do If You Choose Direct Lending
If you decide to buy your dream car through direct lending, shop around and compare financing terms between finance companies in Singapore. It will help you make the right decision about what car you should get and finance terms.
Of course, you would need to know beforehand the difference in how much your dream car cost from various car dealers. Once done, make sure you provide those amount to the finance companies and consider which finance terms suit your needs.
To ease your comparison shop, here’s what you need to compare between finance companies.
● Car’s Purchase Price
- The total cost of how much your dream car would cost. You may or may not already have negotiated the price with the car dealer of your choice.
● Down Payment
- When it comes to the down payment, car dealers require buyers to buy at least 20% of the car’s purchase price for new vehicles. While for used ones, buyers need to pay at least 10%.
● Amount Financed
- It is the amount of money that the finance companies are willing to pay for your dream car. In other words, the amount of money you could borrow from them.
● Contract Rate
- It is the interest that requires you to pay each month you pay back the amount financed. Usually, a reasonable contract rate is around 1.9% to 2.9%, and the turnaround time is between one to seven years.
● Finance Charge
- The total interest rate you have to pay for the entire turnaround time of your vehicle finance solutions.
● Length of Contract in Months
- Vehicle finance solutions usually last for one to seven years, an equivalent of 48 to 60 months.
● Monthly Payment Amount
- The dividend of the amount financed and length of the contract. For an average vehicle, this amount does not exceed or go beyond S$1000 a month.
Keep in mind that there might be additional information you need to consider depending on what the car dealer and the finance company is offering you. Be sure to take your time before finalising your purchase if you choose this option.
Things To Do If You Choose Dealership Financing
Most car dealerships have a department that would let you know the names of finance companies they are working with when buyers choose dealership financing.
Once you found the one you are looking for, they will ask you to fill out the credit application form. The information you need to complete is your SSN, DOB, current and previous address, occupation, course of income, total gross monthly income, and if you have any existing debt.
After you have answered all of that, make sure you ask these questions to the car dealer of your choice. It will give you complete detail about the terms of the contract you will be signing later on once you finalise your purchase.
● Do you offer the manufacturer incentives?
- If the car dealer said yes, clarify what those are. Usually, a manufacturer incentive would reduce the finance rate. That means that the interest you need to pay for the entire vehicle finance solutions would be much lower.
That is why you must ask the car dealer if the model you chose has this manufacturer incentive. And if there is one, what you should do to get it. Most of the time, they would only offer this to buyers that have a good credit history.
● Are there any rebates, discounts or special offers when buying a vehicle from you?
- They usually offer this for different reasons. One of which is a recent college graduate, or you are a member of the military. To learn more if you qualify in those terms, ask them what those are, including the restriction. That way, you would know what you meet and get their rebates, discounts, or special offers.
● How much would the annual percentage rate cost?
- When the car dealer has no special dealership financing, that is the time when you could negotiate the annual percentage rate. Expect to have a flexible negotiation if your credit rating is on or above the average.
You could discuss this detail even before applying for vehicle finance solutions, but it would be much better if you already have a pre-approval deal you could offer them. That secured the amount you need to pay for your dream car.
Asking these three questions would help improve the terms of your car purchasing contact. Therefore, make sure you ask these questions before signing it. That saves up and reduces the vehicle finance solutions you need to pay at later dates.
To Sum Up
There is nothing wrong with opting for vehicle finance solutions if you want to get your dream car. Doing this is the same thing as when you are getting a loan to buy a house. The only difference is that a vehicle could get you anywhere. You could use it to drive yourself from Singapore to Malaysia. All it takes is a three to four hours drive, a toll fee, and you might as well bring your passport along with other documents.
In any case, you are looking for finances companies that could provide you with these options, go to SweeSeng Credit. They offer custom vehicle finance solutions for those who want to get their dream car. Visit their website today and find out what kind of offer they have ready for you.
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