Buying a car on finance has become very popular in recent years, as an alternative for people who cannot to afford to a buy a car outright. There are various finance options available and most garages and dealerships now offer finance on new and used cars.
Most dealers offer various finance options, which can be confusing, especially if you’re not familiar with finance agreements and websites where you can compare car finance deals. One option is hire purchase, which involves putting a small deposit down the car and then paying the rest of the cost over a fixed period of time. This option means that you do not own the car until you have completed the repayments, which means that you can’t make any changes or modifications to it. Hire purchase agreements usually carry administration charges and the interest rate may be higher than a personal loan; if you have good credit, it may work out cheaper to take out a car loan.
Some dealers offer 0% finance on some cars; however, you will need to put down a large deposit in order to get this deal. Typically, you can expect to front up around 40% of the total cost of the car for a 0% finance deal. As there is less to pay off the car, the term of the loan is usually shorter, which means that the repayment amount will be higher; this option is best for people who have a large deposit and the means to pay a relatively high repayment sum each month.
Hiring a car
If you’re not interested in owning a car, hiring may be an option. You can agree a hire time and pay a monthly sum to use the car; this is a good option for people who want to switch cars on a regular basis without the hassle of having to sell a car and then buy another one.
Some finance deals are more beneficial than others and it is worth doing some research to see if finance is the best option for you. In some case, using a credit card or taking out a loan may work out cheaper; however, you will need good credit to get a good deal.
If you are interested in car finance or taking out a car loan, it is useful to compare deals online using an Internet comparison website or to seek advice from an independent financial adviser, who will be able to explain the different agreements with you and recommend the plan which suits your individual situation best.