When you buy a car, there are various different options for financing now available. The most obvious route might be to take the loan offered to you by the garage or retailer. After all, its the most convenient choice right? But the most convenient choice, may not be the best. And there are certainly other routes to obtaining car finance that can be cheaper in the long run. Let’s take a look at the main routes available to fund your next car purchase.
If you’ve got plenty of money in the bank then you might consider simply buying your car outright. On the other hand, even if you do have sufficient funds to make this a reality, you might prefer to keep some or all of your hard-earned cash handy for other purposes. When you use up your cash, you decrease your liquidity and increase the issues that may occur if you suddenly need emergency access to cash.
Furthermore, there are so many cheap finance deals on the market right now, you might prefer to keep your cash sum where it can either earn interest or remain available to you at a moment’s notice, and look for the best possible low-cost deal for a finance deal.
Many car deals will require some form of deposit, and the more cash that you can put down, the lower your resulting interest rate is going to be. That’s because a lender will price a loan product on the basis of risk. If you cannot provide any kind of deposit, you represent a higher risk, than if you can afford to put down a healthy down-payment.
When people begin to compare car finance, they often see that PCP – or personal contract purchase – is one of the most popular ways of buying a car. This is essentially a loan model, which means that various deals will come up when you carry out car finance comparison online. A 10% deposit is typical, and then your repayments are based on the interest rate, the term of the arrangement and the likely value of the car at the end date so that you have an option to make a final payment to purchase the car at the conclusion of the term.
With this arrangement, you essentially rent a car and pay a monthly payment for two to five years for doing so. You will also need to pay for any repairs and will need to hand over the car at the end of the term without an automatic option to purchase the vehicle. This approach tends to have a lower monthly cost than PCP, and you can change your car every few years.
In addition, the cost of road tax and servicing is usually included. Just remember to compare this form of car finance carefully to find the best deals on offer. You can perform a car finance comparison online in just a few minutes to see the full market range of options, rather than a limited range of tied options from the dealership that you buy from.
This is another hire arrangement where you pay a monthly interest rate after putting down a deposit, and then have the option to buy the vehicle at the end of the term at an agreed rate. Hire Purchase contracts to tend to be available via the dealership that you buy your car from, but it’s still worth carrying out an online car finance comparison to see what else is out there.
It is also worth considering a bank loan to purchase a car that you are interested in. A personal loan will offer you access to the necessary funds at an attractive interest rate and you can carry out your car finance comparison for personal loans online in just a few minutes here at Bright Loans. The better your credit rating, the broader your access to these loans will be and the better the interest rate that you are likely to be offered.
You can also apply directly online for your loan after you compare car finance online and spot the deal that best suits your needs. Some people set a budget for their new car purchase and have their finance in place before they go shopping at the car dealership. This then makes you a cash buyer and may put you in a strong position for any negotiation when you are choosing your new car.
Finance comparison sites update constantly so you can see the latest and best rates on the market from trusted providers. Use a reputable car finance comparison site such as Bright Loans so that you know you are only being recommended, quality lenders. These lenders will be accredited and authorised to operate by the FCA, offering competitive loans and excellent service that is in line with financial services conduct regulations and guidelines.
You can apply for your loan online in just a few steps rather than going to your car dealership if you wish to arrange a PCP, HP or car lease arrangement. Some car dealerships will also allow customers to pay by credit card if they have a large credit limit and a low-interest rate – be warned that otherwise that this is a very expensive way to borrow money. There may also be fees applied at the dealership for processing the transaction.
Whichever form of car finance you take out, make sure you understand the features clearly, set a budget so that you can afford the repayments, make a note of any additional costs and spend your time reviewing the best deals on the market before you commit. A new car is a vital investment for many of us, although it’s worth noting that the depreciation of brand new vehicles kicks in as soon as you drive it off the forecourt (top tip, consider nearly new!) – but it’s also just as important that you don’t pay over the odds.