Tips for Buying a Car on Credit

Having own vehicle is definitely a dream of everyone because transportation is an important part in everyday activities. But not everyone can buy a vehicle in cash. The availability of funds was the main reason for buying a vehicle on credit. By providing advances, salary data or the administration of fixed income and other requirements, you can bring a car or motorcycle dream home.

In addition to banks, now many finance companies (multi-) that provide credit facilities. You certainly want to get a dream vehicle as needed and avoid the risk of financial difficulties at a later date. Especially if you intend to fund car loans greater than the motor. Here are some tips buying car on credit to make your finance stay safe:

Select a Vehicle As Needed
You must have imagined the kind of car you need. Consider practicality and economic mobilization in addition to the capacity of passenger / freight and availability of the garage. This should be discussed with other family members. Never put the prestige rather than function.

Price Survey
Once you decide what kind of car you want, the next step is figuring out how to offer the best price. You can ask some dealers who sell the car you want.

Choose the Right Funding Sources
You can choose a bank or financial institution. Each has advantages and disadvantages. In general, banks set interest is smaller than the finance companies. Only requirements and credit approval process of a bank is much more stringent. Vice versa.

Bank further compromise if you are having trouble paying installments. Possibility to re-schedule or loan restructuring is much more open. However, banks only provide financing of 70% for this type of car, while the financial institutions amounted to 75%.

Consult Installment Scheme
Once you drop the choice of financing sources, immediately consult a credit plan that you can afford. Do not be influenced by the sales clerk, you are to understand themselves and the financial ability will be responsible until the loan is completed.

Consult the following few important things:

• Advances and Big Installment

Prepare a cash advance based on the percentage of the price of the car which generally ranges from 20-30 percent. Example, if the price of the car you want 200 million, then at least you have to set aside about Rp40-60 million as an advance. Has not been added to the administrative costs and other expenses. Make sure you have the principle that the advance payment must be more than 20 percent, even when it might be in the top 30 percent.

The larger the down payment, the more you have the opportunity to choose the amount and tenor of the loan installments. Do not hesitate to ask for a discount to lighten advance. You can also ask for an advance payment installment.

• Credit Period

Make sure the credit period not exceeding the age of economical cars. Because, when you have more than four or five years, you have a lot to spend extra money for repairs. The age of the car at the age of five years is a period of improvement when you still have to pay installments. So you threatened spending twice as much.

• Interest Rate

There are a few things to be learned about the interest rates on the market in both the banking sector and financial institutions. Technically there are two types, fixed rate (flat rate) and floating interest rates follow the market interest rate (floating rate). Some banks and financial institutions impose a fixed rate in the early years of the loan and then apply a floating interest rate.

Provide Reserve Fund To Risk
Although you can afford the repayments exceed the minimum and advances above 30 percent, you should also think about the possibility of risk when financial difficulties. Therefore, in addition to repay the car, you should still set aside a portion of income for special savings when the risk occurs.

Determine Insurance Required
Another way of tackling the risk is with insurance. Is usually included in the package supply of credit. For this case, there are two types of car insurance is usually offered, All Risk and Total Loss Only (TLO). The latter only protects vehicle related theft loss to the period of protection up to 12 years.

While for All Risk, wider scope. Vehicles will also be protected from the risk of accidents, riots and natural disasters. If you select All Risk, you can actually ask for a discount of 10-25% of the premiums paid.

Avoid Paying Advances of Loan
One more thing that you should avoid is to not use the money from a bank loan or a loan from a financial institution to increase the down payment. Therefore, when that happens, you have the same two installments obligation doubled.

Happy hunting for your dream car!