A Complete Guide to Car Loan and Auto Financing

Unless you are living in an area where public transportation is available and reliable, owning a car is pretty important. Having a car available at any time is important as it gets us to and from our jobs, social activities, events, or errands.

And unless you want to walk to get things done, a reliable car is your best bet.  As said, the car is one of the most expensive things to buy, and figuring out the financing is generally the first step you need to ponder upon.

Types of financing:

Get your dream car with Bank Islami Auto finance services, but first, you have to decide how you will fund your fresh set of wheels. You can choose from:

1. Hire purchase: HP is also called a credit agreement; the loan is secured against the car, and you cannot own the vehicle until the end of your agreement.
2. Personal contract purchase:  they are also secured against the vehicle/car, but you don’t own the car automatically when the loan term or agreement ends. Either you can choose to return it or buy the car.
3. Personal car loan: through a personal loan, you get the entire amount in one go and can buy the car straight away. You will have to back the loan in fixed monthly instalments.

How to finance a car the smart way:

1. Check your credit score: a credit score predicts your chances of paying back a loan on time. The better your credit score is, the higher your chances will be of financing a car. And if you have a score in the very poor or fair range, consider increasing your credit before financing a vehicle.

• Your budget: before buying your dream car, it is good to set your budget. It is useless to look at a sports car when you can really afford something of the standard class. Before financing a car, it is always a good idea to go over your monthly budget as you will likely be paying interest and other fees as well.

• Understand the car-buying lingo:  you want to get yourself familiar with some terms before financing a car. While the interest (finance charge) is the additional monthly charges on your loan, a car loan is another term. The number of months you can expect o be paying off your loan.

• Getting a loan or a lease; pick from two options:  when it comes to a car financing, you can either get a traditional loan or a lease to pay for the car. Leasing a car is similar to renting since you will return the car at the end of the lease term. 

• Apply for financing:  once you decide and find your ideal loan, you can apply for pre-approval. You can either do this online under the “bank Islami auto finance” option or in person at the bank.  Although you will need some basic information for the application, you will also have to answer many questions about your financing history.

• Set up automatic payments: once you have run the numbers and have a pre-approval, take that to a dealership and get ready to pick up your dream car. To stay in good graces, always choose automatic payments, so you never miss a payment and turn your dream into reality through Islami Bank Car Loan.

Is buying a car safe from your personal loan?

As mentioned before, if your credit rating is good, you can get a personal Islamic Bank Car Loan from us/a finance provider. But make sure that the loan is not secured against your home. You will definitely be putting your home at risk if you fail to keep up with the payments. Some pros and cons you want to consider would be:

Pros:

• You own the car and even sell the car if needed
• Personal loans are the cheapest option rather than paying the total amount.
• You can arrange your loan via phone call, face to face, or online
• Covers the whole cost of the car

Cons:

• Monthly cost could be higher
• Other borrowings might be affected.
• You have to wait for the funds to be paid into your account.

How to choose the best option

Whatever option you choose, the priority should be to save the most money; sometimes, it is not easy to know what option to choose.  Whichever option you choose, always keep in mind that applying for auto loans can affect your credit score.

Moreover, applying for multiple loans in a short period of time can also have a negative impact. Therefore, save a down payment for the loan as the higher it will be, the less you have to finance and pay interest over the life of the loan.