QuestionsGeneral-MiscWhat type of financing would you recommend for purchasing a car
GamingPC_69 asked 12 months ago

I want to purchase a reconditioned small car (hatchback) like a Toyota Vitz, Honda Fit, Suzuki Swift, or a similar model from the years 2015-2018. I'm unsure whether I should opt for a car lease or take out a car loan. Can you please provide me with the advantages and disadvantages of each option? Much appreciated!

urrealthoughts answered 12 months ago

The save your money and buy what you can afford type.

[deleted] answered 12 months ago

car loan is basically a finance lease, so you have finance lease and then you have an operating lease which means you essentially rent the car for a fixed term, and then give it back at the end of the contract. operating lease might not be available with recon cars though…and finance leasing might only allow up to 70% over 7 years for recons. with any loan that requires you to pay interest, please be careful of the floating interest rate they mention on the contract. the loan does makes it easier to pay, but they are impacted everytime the BOM adjusts the key rate. it will make your monthly payments more (or less) than the quotation you were given by the finance company at every monthly payment. my advice, put down a bigger initial cash payment and take a smaller loan, rather than take a longer loan with a lower down payment.

Saifali007 answered 12 months ago

Every Honda fit before 2019 had gearbox issues

Escanor1365 answered 12 months ago

If you have maximum for deposit, it is worth it. Kindly consider fuel and mechanical expenses.

Middle-Commission-85 answered 12 months ago

First, leasing a hybrid or electric car is now at a lower rate, so you can probably take in into consideration.

2 types of lease :

1. Operational lease is where you rent the car for a fixed amount monthly. Not a popular option for individuals and mostly taken by companies.

2. Finance lease – you pay monthly installments over a period of time and at the end of the lease, you get the option to transfer the car to your name for a a nominal amount. Throughout the lease, car is on the name of the leasing company. So, technically if you miss repayments, they may take back the car(you eventually lose your deposit in that instance if the car is sold off)

Car loan – the bank gives you a loan for buying the car. Car in your name but pledged as security in favour of bank.

Most people go for leases which is easier and quicker but don’t explore other options. Rates may be cheaper for bank loans.

You can also check insurance companies which gives loans.

I would personally go for car loan and last time I checked, SBI (not SBM) had a good car loan with best rate in the market.

sleepyreaper18 answered 12 months ago

Car is a depreciating asset. With the new recon prices, its even worst.

Please do a proper cost comparison analysis.

I did mine last year and frankly, i used my money to buy a 2005 second hand civic instead of putting it towards a deposit for a lease.

TheF0rtress3224 answered 12 months ago

Recon Prices are so high right now. If leasing, make sure to deposit like 60%. If you can’t, I’d advise to buy a second hand car and save up.

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