Best Ways to Finance Your Next Car
When it comes to financing your next car, there are several different options available to you.
Because each of them have their own advantages and disadvantages, deciding which one is right
for you can be difficult. Here’s are the four most popular solutions explained.
Taking out a personal loan from a bank, building society, or other finance provider is the most
common way of financing a car. This will give you instant ownership of the vehicle and is ideal
for those who don’t want to deal with any kind of annual mileage restrictions. It’s not
recommended that take out any loan against your home, as you’d risk losing it if you failed to
keep up with repayments.
Hire purchases are another popular way of financing a vehicle. Here, you pay a deposit, typically
10%, followed by a series of fixed monthly payments, usually spread out over one to five years.
Remember, under this kind of agreement, the car is owned by the lender until the final payment
is complete. This kind of approach is ideal for those that want to own the vehicle, but need to be
able to budget it over a certain length of time.
Personal Contract Purchase
A personal contract purchase works a lot like a hire purchase, but you’ll have a few more options
at the end of your contract. Like a hire purchase, you’ll pay an initial deposit along with your
monthly repayments at a fixed interest rate. At the end of the contract, though, you can either
return the car to the supplier, keep it, or trade it in against a replacement. Buying the vehicle
entails one final payment, set at the start of the agreement, which takes into account the car’s
projected retail value of the vehicle.
Finally, personal leasing is where you pay the lender a fixed monthly amount for the use of the
car. This fee, which includes servicing and maintenance fees, takes into account the make and
model of the vehicle, the length of your contract, and your agreed upon annual mileage limit. At
the end of the agreement, you simply return the car to the dealer where you’ll have the option of
choosing another new vehicle and starting over again. This is arguably the simplest approach to
vehicle finance, as you won’t have to worry about aspects like depreciation.
To learn more, take a look here. Remember to consider all of your available options and weigh
the pros and cons to find out which approach is right for you.