Buying a car is big milestone in life if you’re a newly qualified driver. Getting your first car is an exciting time and even if you are an experience driver, getting your next car is always something to look forward to! Nowadays there are many different options on how to fund your next used car and getting a car on finance can be confusing. You also need to consider your budget, running costs and age of the car you want to buy next. Explore the different ways in which you can fund your next car.
Cash is King
The easiest, most straightforward way to purchase your next car is by using cash or your savings. However, cars can be a good few thousand pounds these days so it could take you a while to save up for your next car! You should try to buy your car from a reputable dealership or verified private sale. Some private sales can be risky. You should never hand over any money before seeing the car in person and checking a cars information from the DVLA. Buying a car with cash also means that you are the automatic legal owner of the car, and you can do what you want with the car.
Low Interest Credit Cards
Many people overlook credit cards as a form of car finance. Buying a car with a credit card can be a cheap and easy way to get a good deal. You should opt for a credit card with 0% interest and a high credit limit. Using a credit card to get your next car does require you to pass a credit check and people with good credit will usually get offered the best deals. 0% interest rates are usually limited to a time frame, such as 18 months, so you should try to pay off your loan within this period. You can set up a direct debit to pay your credit amount off each month and keep on top of your spending.
Hire Purchase Car Finance
Hire Purchase car finance can be a straightforward way to fund your next car. You can use your Hire purchase deal on a new or used car. Hire purchase can be a little more expensive than other finance options as it spreads the whole cost of a car and fixed interest into affordable monthly payments. The loan is secured against the vehicle until the last payment is made. This means you won’t be able to own the car until the end of the agreement and if you fail to meet your repayment deadline, the finance company can take the car away from you.
Personal Contract Purchase
One of the most affordable and popular car finance agreements is a PCP. Unlike hire purchase, you are only paying of some of the value of the car with fixed interest rates each month. This means at the end of the finance you are more flexible and have 3 options to choose from. You can pay the final or balloon payment and keep the car, you can use the retail value of the car to part exchange for a newer car or you can hand the car back to the dealer and walk away. If you are looking to trade the car in or hand it back, the lender needs to be able to sell the car after so you will need to agree to mileage limits and take care of the car during your ownership. Any additional damage or mileage charges will be calculated at the end of the agreement.
If you are applying for bad credit car finance then a personal loan may not be suitable for you. A personal loan is usually offered by a bank or building society and is usually only offered to people with good credit. A personal loan can be spread over 1 to 7 years. If you are using a personal loan to buy a car you should opt for a realistic term. The reality is you’d more than likely need a new car before 7 years, but you would still need to pay the loan back. The whole process can be quite quick, and some lenders deposit the money into your account the same day as approval. You can use a personal loan for pretty much anything. Some young drivers tend to buy their first car and first year’s insurance at once using a personal loan as their car insurance for new drivers can be quite expensive.