Finance. Many types of car financing options are available. No surprise, choosing one that works for your needs isn’t always easy. However, knowing the different options may help, and today’s guide summarises some of the different finance options you may want to consider.
What Car Funding Options Are Available
Cars are pretty expensive purchases. As such, considering the different funding options available for your purchase is integral. Following this thought, the finance options below might be worth checking.
Buying Outright
The simplest funding method when buying vehicles is to buy outright. Of course, this does come with the caveat of having to save up first. And, with cars costing thousands, it’s not necessarily an easy feat to save up this much money at once.
However, if you decide to buy outright, it’s important to run a vehicle check to ensure the car does not have outstanding finance. If a car has recorded finance on it, then the owner is the finance company and not the seller. This is why this history check is crucial.
Trading in with a Dealer
If you’d like to buy outright but need to sell your previous car first, trading it in to a dealer could help. This option allows you to exchange your past car and immediately upgrade to a new one. Funds from the previous car can be used to pay off part of the upgrade’s value. The remainder can be paid either in one go or on a finance plan.
Personal Contract Purchase
One common loan for car buying purposes is the Personal Contract Purchase plan. This allows you to place a deposit on a vehicle, borrowing the remainder on finance. Most plans have three or four years for repayment in monthly instalments. At the end of this process, you can pay off any remaining funds with a “balloon repayment” to purchase the vehicle outright; alternatively, you can return the car at this point if you don’t want to keep it. Of course, you won’t get a refund on the payments you’ve made so far.
Personal Contract Hire
If you don’t want to necessarily own the car, Personal Contract Hire – or car leasing – could work better. This option allows you to put down a deposit on a car and pay monthly for using the vehicle; once the plan is up, you can return the car and take on a new loan. This represents a great option for those who aren’t worried about owning their own car.
Hire Purchase
A further common form of loan is the Hire Purchase, which pays off the entirety of the car’s value, usually lasting for around four or five years. However, you’ll still have to pay a transfer fee if you want to own the vehicle outright. Hire Purchases are generally good options if you’re confident you want to keep the car at the end of term.
Final Thoughts
Choosing the right way to pay’s crucial if you’ve been looking to buy a car, be it new or second-hand. However, keep in mind that each finance option differs in pros and cons. So, there’s no simple way to pick a financing plan that works for your needs. Instead, consider the benefits and drawbacks carefully to determine whether this option will work for your needs.
