While buying a new or used car, it is possible that you might go for a car finance agreement (credit sale agreement, lease, conditional sale etc.), since buying out of your savings can be a dumb thing to do, it leaves no money for other expenses. Car finance agreements help you get the car you want either through credit, lease or other methods.
Car dealership sells the car to the finance agency, who then owns the said car, the customer is supposed to make monthly payments under the agreement, in these circumstances, the finance agency allows the consumer to use the car as they please. Car financing options can be useful if you would like to return the car after some time.
If you are a used car buyer, then it is good to get a vehicle history check to know if there are any outstanding finance on car which you're looking to buy.
Credit Sale Agreement is a vehicle financing method that occurs between 3 parties, namely the supplier (dealer), the creditor (lender) and the debtor (customer), where the customer agrees to buy specific goods – in this case, a vehicle from a dealer – and repay to the lender the amount of money borrowed to buy those goods.
It takes a legal form similar to conditional sale agreement. Under credit sale agreement the buyer of the goods will immediately become the owner and there is no reclamation of goods. Often seen as a ‘buy now, pay later’ condition where buyer takes ownership of goods and pays the remaining price through installments.
In this type of financing, there is no deferment of title to the goods bought. Get an outstanding finance check before you buy a used one, check if it is on some type of vehicle financing or not.
Interest free offers are tempting and not really free from interest, the price of the goods is made higher to compensate for the “interest free” deal. As long as you keep paying on time, it won’t be an issue, but if there is a delay, then you would have to pay more than usual, because the interest has already been adjusted.
The lender may start charging interest and it could get you into a debt trap that you don’t want to fall under. Check your options thoroughly before choosing the right type of car finance.
Obtain a full car history check before you buy your used car, to check outstanding finance on car, written off details, number plate changes, colour change details etc. It is important to thoroughly check all the details of a used car, since there are a lot of factors that need to be considered.