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The soaring pollution level has raised the alarm bells, and that is why the government is trying to find ways to reduce it. Emission accounts for the highest contribution to global warming, and electric cars have been an amazing solution to whittle down the level of emissions.
The demand for electric cars has recently gone up, but the car industry still needs to wait for years to see these models competing against fuel cars as they are exorbitant, and people feel a pinch in their pockets to buy them. Although initial capital investment can be very high, electric vehicles may offer various advantages. You can run them at a low maintenance cost.
These cars are expensive, especially if you want to pay for them outright. It is great if you can pay money out of your pocket outright. However, electric cars finance is an available option if you cannot afford it outright.
Electric Cars Finance Options
There are various finance options. You can consider buying an electric car. You can make a decision about a financing option based on your current income, credit score, and other factors. The following are the financing options you can choose to buy a car:
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Auto Loan
This is likely to be the most favorable option whether you are to buy a used car or a new electric cars. The term of these loans may be up to three to five years, which means you can spread the cost over a couple of years, which makes the loan more manageable.
Taking out a car loan will cost you more overall compared to buying with cash. As you pay off your debt, you will get the title of the car. While taking out an auto loan, you do not have to put additional security. Your car will serve as collateral, but you will be absolutely free to use it. The lender can seize your car only when you make a default and permanently fail to settle your outstanding dues.
You cannot borrow as much as the total market value of the car. You must have some savings to pay for a particular portion of the cost outright, known as a down payment. It is expected to be 10% or more. With higher upfront money, you can avail of lower interest rates.
You can borrow money from a bank or an online lender. However, the former may cast you aside if your credit score is not up to the mark. Online lenders can let you borrow money despite your bad credit history.
Interest rates will slightly be higher; however, you can get competitive interest rates by doing proper research beforehand. Reputable online lenders like CashPounds will provide you with money at competitive interest rates.
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Hire Purchase
This sort of facility is available with car dealers. No lenders offer to hire purchase or personal contract purchase agreements to borrowers. A car dealer will tell you about these agreements when you have picked a model for you.
Hire purchase agreements also require you to pay down the deposit, amount to 10%. However, you can secure a more affordable deal if it is bigger. As the name suggests, you are hiring the car. You cannot become an owner of the car unless you pay down all instalments.
Each instalment will go toward the principal and interest. Once you pay down all monthly instalments, you will have to pay a nominal fee to become the legal owner of the car. The best thing about a hire purchase is that you are eligible for it even if you look for car finance in Ireland with bad credit.
Hire purchase deals can be more expensive than auto loans. Therefore, compare the total cost of both so that you can choose a more affordable option.
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Personal Contract Purchase
This sort of agreement is also available with car dealers. It is a purchase agreement that just covers the cost of depreciation. Therefore, the monthly payments are smaller than the hire purchase agreement and more manageable.
You will have to adhere to the terms and conditions of the mileage. Otherwise, extra costs will be added to you. A personal contract purchase length may be up to three or five years, depending on the borrowing amount.
The minimum down payment should be 10%. However, you can get a more affordable deal by arranging a bigger deposit size. Unlike hire purchase, you have an option of owning the car by making a balloon payment or handing back the keys and walking away.
You can also trade it in for a new car on a new personal contract purchase agreement. This can be a very expensive deal as a car dealer can cover the cost by charging for depreciation, and when you make a balloon payment to get the car, it means you are likely paying double the amount.
Some people confuse it with personal contract hire. PCP and PCH are both dealership deals, but they are different. The latter is car leasing. It does not allow you to buy the car when the lease term ends. You will have to return the car.
How to decide the best Electric Cars Finance Option?
Whether you should take out a car loan or opt for a hire purchase or a personal contract purchase, it boils down to your individual circumstances and needs. For instance, if you cannot qualify for a loan at attractive interest rates from banks or online lenders due to a bad credit score, you have no other way than to opt for car dealership finance.
Likewise, if you want to own the car in the end, a hire purchase will be a better option. PCP or PCH are the best alternatives when you are happy to take back the car.
If you are looking for a car for your daily errand and going to college, getting dealership financing can be difficult. A couple of online lenders provide car finance for the unemployed in Ireland to young students. You will have to evaluate your current repaying capacity and credit report and compare interest rates offered by lenders to choose the best deal.
You may need to buy a second hand car because your part-time income covers monthly instalments of your debt. CashPounds offers these loans to the unemployed as well based on their affordability. Apart from it, you should also look at your credit rating and down payment.
If you have a good credit score, you will be able to avail of competitive interest rates, and a higher down payment means a lower loan to value. This also helps whittle down the interest rates. In fact, by arranging a bigger deposit, you can enjoy lower interest rates despite a poor credit rating.
Conclusion
If you are looking to buy an electric cars on finance, you will have to carefully assess the pros and cons of each option available to you.
Further, you need to look into your credit score, repaying capacity, down payment, and above all, your preferences. Choosing the best electric car finance deal can be tricky, but you may be able to land a good decision with proper research.
Apart from Google research, you should take people’s opinions as well about these financing options. They will likely tell you better about them.
