If you’re approaching retirement, there are many reasons why it makes sense to look for a brand new car. At this stage in your life, there are more things to enjoy and you don’t want to spend your time continually changing cars. Therefore, a shrewd purchase will see you through your retirement years.
As with all new car buyers, the question of financing your vehicle can be a tricky one, but for those of usual retirement age, the issue raises more questions. If you’re not in a position to finance your new vehicle outright, what are your options?
Without any steady retirement income you may find that arranging a personal loan could be tricky, but this doesn’t mean it’s impossible by any means. Before speaking to a host of lenders, speak to your bank and if they’ve known you as a customer for some time, they may be able to offer a competitive loan.
You could also discuss personal finance with the car showroom itself and although they may not offer the most competitive rate, it can be useful to get an agreement by way of comparison.
Finally, when it comes to personal loans, it can pay to shop around but for those at retirement age, refusals can be more frequent. By checking moneysupermarket.com you can therefore save yourself a lot of time.
If you have a lump sum from your retirement but don’t want to spend all of it on a new car, you may want to consider personal contract purchase. This allows you to pay off part of the car over a fixed period, after which you can decide whether or not to buy the vehicle in full.
Alternatively, you can trade up to a newer model and start the process all over again. This can be a good option in a lot of cases, as you’ll find that interest rates can be much lower.
Purchasing a new vehicle with a credit card is becoming increasingly popular and many people in retirement may find themselves in a position where they have a clear card with a credit limit that could finance the outright purchase of a new car.
As with every option, there are advantages and disadvantages and while this gives you the flexibility to pay back as much or as little as you wish, you need to assess how much you’ll be paying back when interest is added on, before deciding if this is your best option.
Hire purchase can be a viable option for retired people as this method does offer flexibility and a low deposit, which may be waived in some cases.
You then sign up to a monthly payment plan that is reviewed as soon as half the vehicle is paid off. For retired people, it may be harder to source HP agreements, but there are clear benefits if you have little or no deposit to put down.
One of the downsides here is that you are effectively hiring the vehicle, so you are liable for even the most minor damage to the car. Although this may be a good option financially, this is therefore one that should be considered with great care.
Releasing equity in your home is a possibility and this is becoming an increasingly popular method of financing a whole host of purchases for retired people. This can be preferable from a financial point of view and with the lowest penalties, it is becoming more popular.
Other borrowers see this form of raising funds as a last resort, however, so you need to think very carefully before entering into such an agreement.
As with every purchase, it pays to consider all your options and look at financial and other issues before you commit to one single solution.
You should also look at comparison sites when it comes to comparing loans and other finance, as this can save you a great deal of time in the long term.