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.

Personal Loan

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 Purchase

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.

Personal Leasing

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.

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