Searching for a new car but wondering what the best way to finance it would be? These days, you have a lot of options when it comes to paying for a new car. Unfortunately, the sheer amount of choice available can make it difficult to decide which one is right for you. So, if you’re confused about the options available, below you’ll discover how to determine the best way to finance your favourite car.
Personal Contract Purchase (PCP)
There’s a lot of different types of car finance on offer, but PCP tends to be one of the most popular options. This is because, compared to many other types of finance, the monthly repayments on a PCP tend to be much lower. You’ll also have flexible repayment terms, a low initial deposit and you’ll be able to choose what you want to do with the car at the end of the agreement. So, there’s definitely a lot of positives there, especially for those who can’t afford a large repayment each month.
However, some of the cons you do need to be aware of include, there may be additional fees if you go over mileage allowances and you’ll need to pay an outstanding balance at the end of the contract to keep the car.
Another option open to you is a car loan. You can either look for a personal loan or choose a specialty car loan. Companies such as the AA, allow you to calculate how much your car finance loan will cost each month before you apply. This ensures you know roughly what you’ll need to pay if you do decide to use a loan to pay for the car.
The advantages of this option include you’ll own the car outright and the repayments on the loan may be lower than they are for leasing or PCP.
If you like the idea of having a new car every few years, car leasing could be the option for you. With these agreements, you typically pay an affordable monthly sum, then at the end of the lease agreement, you hand the car back and choose another one. You will usually be required to pay some amount upfront before the monthly payments begin. The rates do tend to be cheaper than other finance options, though obviously you won’t own the vehicle at the end.
These are some of the most popular forms of car finance available. As you can see, there are pros and cons to each option. So, to choose the one that’s right for you, think about how much you can afford to repay each month, and whether or not you’d like to own the car at the end of the contract.