Published on November 30th, 2016 | by James Simpson0
Buying A Car? Find The Right Finance Option For You
Whether you’re trading in your old car for buying a new one, there are plenty of financing options out there to help you.
So, before you cruise around looking for the right motor, check out our guide to getting the best car finance quote.
A personal loan
Loans are at their lowest level for a decade. On average, you can borrow between £1,000 and £15,000 over two, three or five years with a fixed rate. If you have other debts, consolidation loans let you pay them off together with one monthly payment. This approach could improve that all-important credit rating for getting a car. Just bear in mind these loans use your house as security. So, you need to keep up the repayments for one year, or you risk losing your home.
Leasing and hire purchase
According to the AA, your car will lose 60% of its resale value after just three years. With car leasing, you pay a fixed monthly cost over an agreed time, which includes breakdown and maintenance cover. With hire purchase, after paying your final fixed monthly loan payment (and an initial 10% deposit), you own the car. Read our Secrets to Saving on Your Next Car.
Pay by card
Some credit card companies offer interest-free periods on new purchases. If they grant you enough limit, you can clear the debt once it’s paid up, or switch to another card.
Team up with family or friends
According to the AA Car Purchase Index, 52% of people use their savings to buy a car. If you don’t have enough saved up, you can ask to borrow the money – free of interest or for an agreed rate – from a friend or family member.
Or, if you have a friend or partner in the same boat, consider buying a car together and you’ll halve the cost. And when it comes to insuring your car, an experienced ‘named driver’ on-board with a clean license will save you even more money.
Manufacturer and dealer financing
If you fancy a haggle, it’s worth going into a manufacturer or car dealer to see what they can do for you. Most manufacturers offer hire purchase and leasing options. Dealers will also offer personal loans (partnered with banks) with interest rates open to negotiation. Do your homework and have finance quotes from the tips above before you brave a showroom. For extra ammo, learn more about manufacturer financing options.
Personal Contract Plan
With a Personal Contract Plan (PCP), you don’t pay for a car outright. Instead, you pay the difference between the sale and resale price. You’ll pay in monthly instalments based on annual mileage prediction over the agreed term.
If you’re using online comparison sites, remember to compare the comparison websites, because they won’t all cover the same options.
And once you find the right finance option for you and get your car; look after it and drive safely! A car in good condition and a clean license is your best route to saving money on your next motor.