How to finance a second car

February 20, 2019

Sharing a car with your significant other or a family member can become difficult.  It can be more stressful if neither of you works in the same area, making it hard to compromise. You end up having to wake up earlier than you need to in order to avoid being stuck in traffic.

Weekends are also difficult as you both need the car to run errands. However, you don’t have to argue with your significant other or family member anymore. You have the option of applying for vehicle finance in order for your family to get the second car you need.

Before you head over to a registered credit provider you need to be well informed. When you plan on taking out a loan you need to know how you can apply for a loan without getting yourself into unmanageable debt.

Below are helpful tips on how you can finance your second car.

Create a budget

The first thing you need to do is create a budget. A budget will help you see how much you can afford to pay for the second car. If the first car is still financed you need to consider whether you can afford to pay for both cars.

You can look into balloon payments and see if works for your budget. If not you can ask your significant partner or family member can assist with payment. It is crucial that you look over your monthly budget and see how you will be able to make the monthly repayments.

Lenders have vehicle finance affordability calculators. These calculators are there to assist you so that you can work out your affordability. Be mindful that the calculations made on the calculator are subject to change.

You need to note that the rates quoted are guidelines only. The calculator is put in place so that you can have an idea of how much you could be paying per month. The calculator also allows you to see how much interest your financed vehicle would have.

Look at your credit score

In order for you to even get pre-approved for your second car, you need to have a good credit score. Having a good credit score allows the lender to trust that you will pay back the loan amount diligently.

Look at your credit score to see that you’re eligible for financing. It’s your responsibility to check your credit score every year and to pay your debts on time. If you need to see your report you can get it from TransUnion, Experian, and Compuscan.

Brand new or second-hand car

You need to decide which route you’re planning on taking. Do you want to buy a second-hand car or a brand new car? Both have their own advantages and disadvantages so it’s up to you.

The smell of a brand new car is appealing but it is pricier and loses it’s value faster so you should keep that in mind. A second-hand vehicle is more affordable and you won’t have to pay for the depreciation value. But, it can be hard to tell what condition the car is in especially if you don’t know much about cars.

If you plan on buying a second-hand car, make sure you take someone with you who will advise you on the condition of the car. It’s wise to take a mechanic with you to perform a thorough inspection of the car – the last thing you want is to have to pay the lender a large amount of money for a lemon car.

Once you have decided if you’re buying a new or second-hand vehicle, you can decide where or who you’re buying it from. Are you interested in buying from a dealer or a private seller? A lender will offer you the option of choosing where you would like to purchase your vehicle.

Choose a vehicle

Once you have worked out your budget and whether you’re buying a new car or not, you can choose which vehicle you can afford. When choosing your second vehicle you need to look at what you need from the car. Do you need a bigger car for family trips or is having a small car suitable?

Whether you are planning on buying a family car or not, it would be ideal that you look at the car’s safety features. Check if the car has an anti-lock brake system, electronic stability control, head-protecting airbags, and safety belt features. Buying a car with good safety features will allow you to enjoy the car when driving alone or with family members. Every single day there are accidents on the road, so it’s important that you remain safe and careful.

Once you have decided on your second car, you can then go to the financial service provider and discuss payment options. Even though you have checked on the vehicle calculator, its important that you find out how much your monthly instalment is and interest rate. If you have any questions about the process your lender will use, there normally is information provided on their sites. Alternatively, you can call in and have a financial advisor advise you.

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