Equity Sharing Agreement: 4 Considerations Before You Buy a Car
An equity sharing agreement can be a great way to buy a car when you don't have the full amount of money for a down payment. However, there are some things you need to consider before signing on the dotted line.
1. How Long Do You Need the Car?
One of the first things to think about is how long you need the car. If you only need it for a short period of time, an equity sharing agreement may not be the best option. This is because you'll be building equity in the car that you may not be able to use if you don't keep the car for the entire length of the agreement.
2. How Much Can You Afford?
Another consideration is how much you can afford to pay each month. With an equity sharing agreement, you'll be responsible for a portion of the car's monthly payments. Make sure you can comfortably make these payments before signing an agreement.
3. What's the Resale Value of the Car?
Another thing to think about is the resale value of the car. If you're planning on selling the car before the end of the equity sharing agreement, you need to make sure you'll be able to sell it for more than you owe. Otherwise, you may end up losing money on the deal.
4. Are You Comfortable with the Risks?
Finally, you need to be comfortable with the risks involved in an equity sharing agreement. There's always the possibility that something could happen that would make it difficult or impossible to make your monthly payments. If you're not comfortable with this risk, an equity sharing agreement may not be the right choice for you.