Car Financing Options

Car Financing Options

A car has become a necessity for many individuals and families. Cars provide a common means of transportation, whether it is for a long trip or even a shorter trip to run errands around town. For many however, before acquiring a car, there is always a question of considering car financing options.

Savings – When interest rates are so low, it’s likely that your savings will not be earning much in a bank or building society account. So rather than keeping your savings and borrowing at a higher rate of interest, you could use them to fund all or some of the cost of the car.

Personal loan – You can get a personal loan from a bank, building society or finance provider so long as your credit rating is good. Make sure the loan is not secured against your home. Otherwise you will be putting your home at risk if you failed to keep up with repayments.

Hire purchase – These deals are normally arranged by the car dealer and are often very competitive for new cars and less for used cars.The advantages include being quick and easy to arrange, low deposit, flexible repayment terms and competitive fixed interest rates.

Personal contract plan – This type of car finance deal is a variation on hire purchase and tends to result in lower monthly payments. Instead of paying for the car outright, you agree to pay the difference between its sale price and its price for resale back to the dealer. This is based on a forecast of annual mileage over the term of the agreement. Payments are spread over a shorter term of 12 to 36 months.

Personal leasing – You can pay the dealer a fixed monthly amount for the use of a car, with servicing and maintenance included, as long as the mileage doesn’t exceed a specified limit. At the end of the agreement, you hand the car back. It never belongs to you.

 

Categories: General