There are many different products available these days that can make affording a new car much easier. This is one of the reasons why many people choose to buy a car on finance. This could allow you to buy a reliable car that will last you and your family a long time.
If you are thinking about buying your next car on finance then it can pay to learn more about these products. They will all have their own advantages and disadvantages. By doing some quick research you can identify which product could best suit your needs and financial situation.
Car Finance Products
To help you understand more about how to buy car finance here is a quick run-down of the main products available:
Personal Loan
This type of loan is available from most of the main high street and online banks and building societies. Personal loans are a very straightforward option as they allow you to borrow money at a fixed rate for a set term. You do not have to be an existing customer of a bank in order to apply for a personal loan with them. However, it does help if you already have a good record with the bank before you apply.
Hire Purchase (HP) Agreement
HP agreements have been around for many years now and are available directly from the dealers. This is also a very easy product to manage. You will only borrow enough money to purchase the car you want. In most cases, you will need to pay a small deposit at the start of the agreement. Then you just pay the remaining amount owed off in monthly installments. At the end of the HP agreement, the car will be yours completely.
Personal Contract Plans (PCP)
These plans are also available direct from the dealer. They offer more flexible repayment options than HP agreements. With PCP you pay a small deposit upfront followed by the standard monthly repayments. However, after 2/3 years, you can choose to pay a final balloon payment and own the car outright or hand the car back to the dealer. This can be a good way of being able to drive around a more expensive luxury car you might not have been able to afford to buy outright. If you want to hand the car back to the dealer it will have to be in good condition and within the agreed mileage limits.
0% Purchase Credit Cards
Credit cards offer a fast way to buy a car on finance. Major credit cards with 0% interest on purchases are easy to apply for and are accepted everywhere.
However, you do need to make sure you pay off the amount within a year. This is because most cards will only offer 0% interest for a maximum of 12 months. After this, you could end up paying high interest on your car purchase.
