|  Financing
the purchase of a car can be confusing,
with such a wide range of car finance
options available to you. Do you get
a personal loan or do you go with a
manufacturer’s deal and part-exchange
your current vehicle?
Here
we highlight the most common ways that
car finance is raised:
1.
Hire Purchase
This option is offered on new and used
cars by dealers and can be fairly easy
to arrange. However, you do not own
the car until the final payment, which
means you cannot sell it until you have
settled up your loan.
Interest
rates vary, but can be competitive against
bank loans.
2.
Remortgage
While you may spend the next 20-odd
years paying for your car, remortgaging
is still the cheapest way to borrow
(unless you get interest-free finance
– see below). If you are a homeowner,
most mortgage companies will allow you
to borrow more for other things like
car purchase.
3.
Interest–free Finance
Available from car dealers, interest-free
finance is normally for brand new cars
only. However, these can be a great
way of getting a new car without paying
interest on any finance. However, getting
interest–free finance and a discount
at the same time can be hard –
so it may pay to haggle hard on the
price of the car and borrow elsewhere.
4.
Personal Contract Purchase
Monthly payments from your bank account
are spread out over a pre-defined period
(normally 2 – 4 years). At the
end of the period, you either make a
lump sum payment to purchase the car
outright, or you hand it back.
5.
Personal Loan
A personal loan can be arranged separately
from the purchase of a car, meaning
that in the eyes of a dealer, you are
a ‘cash’ buyer. Personal
loans can be arranged via banks, building
societies and finance houses.
6.
Car Loan
This is another name for a personal
loan, although you may get additional
benefits such as payment “holidays”
or a free car inspection prior to purchase.
|
