Cars are not only becoming more affordable to the ordinary man, but financing to purchase one is very much within reach, even if liquid asset is not readily available. Essentially, liquid asset is available cash or asset that can be quickly converted to cash when you need to make a purchase.
But even without ready cash, buyers can seek financing from lending institutions, such as banks, when the need for funding arises. Of course, seeking the latter option will attract an interest and the borrower will essentially have to weigh his/her option in terms of the ability to repay for the agreed period.
There are quite a few individuals who have a preference to make cash purchases. Utilizing this option might be deemed the simplest when making such a purchase. However, persons must bear in mind that the circumstances are quite different when purchasing from a dealer or from a previous owner.
CASH PURCHASE
After choosing whether to buy directly from a dealer or a previous owner, the buyer can then choose to pay the cost of the car by way of cash, cheque or money transfer. It is often advisable to pay a portion of the cash to the seller up front. It is also advisable to pay by the safest means possible – either cheque or money transfer.
When buying from a dealer, the process of registration, which is facilitated by the local tax collection agency, the Guyana Revenue Authority [GRA], is for the most part taken care of by the dealer. This essentially leaves little work for the buyer, other than providing a valid form of identification, Tax Identification Number [TIN] Certificate and the payment for the vehicle. Once the buyer will also be the driver of the vehicle, a driver’s license will be required to legally drive the car out of the dealership’s showroom.
However, when buying from a previous owner, the buyer may be expected to be more hands-on in the registration process. This means that both the buyer and the seller will have to be involved in the process to have the vehicle transferred from the old owner to the new owner. This, of course, will require an agreement of sale between the buyer and the seller.
At GRA, a cost is attached to the transfer of the vehicle from the seller to the buyer, which is usually $25,000 or two percent of the sale price of the vehicle depending on which is greater.
The process of transfer entails the completion of an application form for transfer of ownership of the motor vehicle and both parties must be present at GRA when this is being processed. Both are required to have in place their TIN certificates and valid ID. Also, a copy of the original certificate of registration must be presented to GRA to facilitate the transfer of the vehicle. The process usually takes one business day before the
new owner can receive the new registration certificate for the purchased car.
FINANCING FROM LENDING INSTITUTIONS
Should the buyer opt for financing from a bank, the process may take a few days longer than if he or she made a cash purchase. Bear in mind, too, that the type of car you buy will add to your net worth and could even make you eligible for higher future financing once you prove to be a reliable client. However, the buyer will certainly have to first prove to the bank that they have the capacity to repay the loan within a stipulated time. For instance, the buyer must have proof of income, which not only covers the monthly repayment amount but also leaves enough for the buyer to cover his or her other expenses. Often, the agreement between the bank and the buyer is that the buyer must have in hand at least 25 percent of the cost of the vehicle in question. This, however, may differ from one financial institution to another.
The buyer may also be required to have a bank account with the lending institution through which payments will be made. The buyer will also have to provide all necessary documents including valid identification, proof of address, job letter and pay slip or a notarized letter if they are self employed. Additionally, the buyer will also have to present to the bank a quotation from a recognized dealer of the cost of the vehicle or an agreement of sale if buying from a previous owner.
If buying from a previous owner, the buyer will also have to present to the bank the previous owner’s valid identification and original registration of the vehicle to the bank.
Once the repayment agreement is completed and all dotted lines are signed, the bank is likely to take a few days to process the payment, allowing for the cutting of a cheque for the payment of the vehicle either to a car dealership or to the previous owner.
TAKING CARE
Whether through a lending institution or one’s liquid asset, the new owner of the vehicle will have to ensure that it is insured by a recognized insurance company which will help to offset cost should there be an unfortunate accident causing damage to the vehicle. Insurance is required by law. But there is even more that a new buyer needs to know about buying his or her first car. In fact, those desirous of buying a car must bear in mind that owning a car means that you must be prepared for additional responsibilities. Primary among these is accepting that a car cannot run on fumes and will need gasoline to keep it zooming along.
Also, as a new owner of a car, you will have to take care of this asset in other ways. In addition to fuel, finances will have to be put aside to cater for regular servicing of the vehicle to ensure that it performs optimally. Regular washing and waxing will also be required and a paint job may at some point be needed to keep your car in good condition for years to come.
