An introduction to car finance

Buying a new car is an expensive business and looking into financing the deal can provide you with a minefield of information. Whether youre looking to buy a hatchback car such as a Vauxhall Astra or an Alfa Romeo Giuletta or a high-powered supercar like a Ferrari or Lamborghini, youre going to need some sort of finance. Weve distilled the options for you, making it easy for you to find the best finance option for you when buying your next new car.

Personal loan

For many people, this is a good option as it means the finance is not tied to the product. However, increased interest rates and a lower likelihood of being accepted does put a lot of people off, plus you don’t get the added benefits of other types of finance.

Hire purchase

This ties the finance to the vehicle but gives you a lot of flexibility in terms of payment options and means you will own the car fully once the finance arrangement ends. Most dealers will offer a hire purchase arrangement.

Personal contract plan

This is ideal if you want to keep your repayments low and to replace your car every couple of years. It allows you to either keep the car at the end of the deal, sell it privately or hand it back to the dealer and start again with a new car on another PCP.

Leasing

This is ideal for commercial vehicles and for many types of residential arrangement, allowing you to have a new car regularly without having any of the hassles of ownership. Youll pay a regular monthly payment based on your annual mileage and the length of time you want the car for. You wont need to worry about repairs or maintenance, which can be included in the payments.

0% finance

This is ideal for keeping interest payments as low as is physically possible, but does mean youll have to pay a large deposit (usually around a third of the cars list price, sometimes more) with interest-free instalments making up the rest of the deal.

Whichever option is best for you, youve certainly got choice. If youre not in the fortunate position to be able to pay in cash, theres bound to be a finance option available which suits you perfectly.

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