Financing Your Next Car with CrowdFunding

CFB News Desk, Buying a car is an expensive purchase, be it a new or a used one, and financing it is very difficult, with many people having trouble to get approved for an auto loan due to bad credit or insufficient income to service the loan. That’s why a lot of people are turning to alternative ways for getting the funds for their next car purchase, with crowdfunding as one of the most popular options that have emerged lately. Crowdfunding is the process of raising funds for all sorts of purposes by asking people over the Internet to give their financial contributions. For a while now, it has been used to raise money for medical procedures, for funding start-up companies, art projects, charity, and even mortgages, but entered the automotive finance market only recently.   car_bmw_rim_236192 Crowdfunding has become a great resource for people to finance their cars, as it basically excludes banks, creditunions, and other financial institutions, that are nothing more than middlemen, which means no credit reports, no proofs for your occupation and sources of income, and no interest rates.When it comes to crowdfunding cars, it’s a pretty straightforward process, that allows you to start an account on a website that connects investors and people looking for financial contributions, and try and collect the money you need for car purchase. The crowdfunding website, for its part, charges a fee – that is usually somewhere around 10 percent – to the funds raised.Raising money this way is particularly convenient for teenage drivers or students, who don’t have a steady income and can’t get a car loan from a bank or a credit union. Using a crowdfunding platform, you can easily collect $2,000 or $3,000 and get yourself a decent used car, by asking people from an online community to donate $20-$30 each, which is a pretty reasonable amount to ask from a complete stranger. In many cases, parents promise tomatch the amount raised in an effort to motivate them to try and finance their cars on their own.A couple of car makers have recognized the great potential crowdfunding has in terms of attracting younger consumers, with Chrysler introducing the Dodge Dart Registry, allowing you to customize a Dodge Dart and choose the type of engine, rims, or other parts you want the car to be fitted with, and allow friends and family to buy those parts for you. Another example – and a much more successful one – of a car company using crowdfunding to expand its customer base is Hyundai’s partnership with Motozuma.com, a crowdfunding platform, allowing consumers to try and collect contributions for a down payment on one of their models and matching those contributions dollar for dollar, up to $500. Hyundai sold 1,600 cars with this project, which proves that car makers can lure Millennials with this type of innovative and a very convenient car finance option.

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