A car is a major purchase. The way you pay for it can make a big difference to your personal finances. Fortunately for the modern motorist, there are many different ways of paying for a vehicle. Each comes with their own advantages and drawbacks. Let’s assess some of the more popular methods.
If you have a large enough sum of money waiting in your current account, then you can use it to pay for a car outright. This means that you won’t be tied into an agreement with a lender, and you won’t have any restrictions on what you can do with the car. If you have modifications in mind, then this might well be the best choice.
Personal Contract Hire
Personal contract hire involves paying a fixed sum at the end of each month, as well as a larger deposit at the sart of the agreement. When the contract expires, you’ll be able to swap your existing car in for a new one. This arrangement is often called a lease. Since you won’t actually be paying for the car, but just the use of it, you can expect to pay very little each month.
This is a variety of financing that’s extremely popular with those who prefer to drive the latest car possible. There’s no need to worry about selling a car when you need a replacement – the leasing company will take care of that on your behalf.
Personal Contract Purchase
This is a variety of lease whereby you actually pay for a small portion of the car each month, such that you eventually end up owning it outright. As such, the monthly repayments are slightly more challenging – but over time, you will actually end up buying an asset.
A personal loan can provide you with the money you need to buy a car. You can get this from a variety of different lenders, so it’s always worth shopping around. The chances are good that what the dealer offers you won’t be the best deal available.
New Car Finance
If you’re looking for a bargain, but you still want a new car, then manufacturer new-car finance might be the best option. Interest rates on this sort of finance tend to be competitive, thanks to extremely fierce competition between the different manufacturers and lenders.
You can usually find the most competitive deals on the cars that dealers are looking to offload. This might be because there’s limited demand for the vehicle in quesiton, or because it’s soon to be replaced by a newer model. This might mean large amounts of depreciation in the near future – so make sure you factor that into your decision-making process before you reach your conclusion.