There is a lot to consider when it comes to buying a car. Factors such as whether to buy a new or used car are at the forefront of these considerations, as is the size and the type of car you choose. Once you have some firm ideas about what kind of car you want, you then need to think about how you will pay for it and for many of us this means some kind of finance option needs to be implemented. Here we explore the smart way to finance your next car.
A personal loan from a bank is still a common route to follow for people looking to secure finance for a car. These often come as unsecured loans, but do, more often than not, involve a credit check and so having a good relationship with your bank is key to getting a good financial deal. You will need to evidence that you are able to pay back the money you will be lending for your car.
It is also worth bearing in mind that there are lots of different types of personal loans and so looking closely at the finer details is a good idea.
Higher Purchase (HP)
HP is a type of borrowing. It’s different to other types of borrowing in the aspect that you won’t own the car until it has been paid in full. Through this agreement you would hire the car and pay back an agreed amount in instalments. It is another well-travelled route and although it is relatively easy to secure and arrange, the interest rates are often significantly higher than those you would get from a bank and the terms are less flexible. The lender however may be able to take back the car is you fall behind, or you can’t pay your agreed payments.
Leasing a Car
Leasing cars has become extremely popular over the last few years and offers drivers a way to get a new car and not worry about the resale value. This is known as PCH Leasing. Lease agreements are arranged to span a similar period as a loan would, typically 3 to 5 years and once the agreement expires, you return the car and, should you wish to start a new agreement, with a new car. There are however strict guidelines and restrictions when leasing a car so it’s important you follow and understand what these are. PCP is very similar to PCH but differs in that it gives you the opportunity of purchasing the car in the future.
The monthly payments are not dissimilar to those you would find with a loan repayment and often include things such as servicing and vehicle maintenance checks.
As well as looking into finance, you may also want to look at ways to test drive the type of car you are looking to buy. Should this be the case Dayinsure offer temporary insurance specifically for this type of activity. This type of insurance usually covers from 1 – 28 days. It’s the perfect solution for emergencies or where someone temporary needs to borrow your car. This insurance will cover them for the length of time they need to use the car for.
In addition, you should consider how much the car will cost to run; fuel, insurance and maintenance is also a good idea to check first as it will help prevent unexpected costs in the future.
The smart way to finance your next car is to do your homework and to look at the bigger picture,
that way you will get the car you want at a price you expect.