When you buy a car, you don’t need to think about saving a lot of money. In fact, Vindis, who are also VW service providers, have detailed various finance options available to you when getting your hands on your next set of wheels when it’s new — other than buying the car outright obviously. Keep reading as they offer insight into how many finance options are open to you when in the market for a used car too.
New cars
Getting a personal loan
From one to seven year period, a personal loan is provided by a bank or building and can help ease the process of buying a car. According to a survey by WhatCar? a personal loan is the most popular way to finance a new vehicle, with a third of those who were involved in the motoring publication’s poll saying they favoured this finance option over all others.
If you’re looking for an affordable way to borrow money, a personal loan is a great avenue to go down — especially if you plan on paying back over a long period of time. Competitive fixed interest rates can be gained if you shop around for your personal loan too, while you often won’t even need to worry about paying a deposit to get the loan.
If you do opt for this way of purchase, you don’t have to worry about any mileage restrictions and will and will not have to give the car back to the dealership once the loan is repaid. Just be sure that you can keep up with your payments, as any of your assets can be seized should you be unable to pay one of your installments — only your vehicle will be vulnerable to being reprocessed should the same thing happen with dealer finance.
If you want to take out a personal loan, you’ll likely need a positive and clear credit rating. Ensure the vehicle that you have your eyes on will be something that you can imagine driving for years to come, as the lender will still require you to repay the full loan even if you sell it or it gets written-off.
Looking into hire purchase (HP)
This is the easiest way of getting a car. Sixteen per cent of those involved in the earlier mentioned WhatCar? survey admitted they favoured this type of car finance. After typically paying a deposit — usually 10 per cent of the car’s total value at the time of purchase — you then repay the remaining balance in monthly installments, plus interest, throughout the rest of the loan period. Once the loan is paid in its entirety, you will own the vehicle outright.
With this, there’s no reconditioning costs or the need to worry about additional mileage charges. There are a couple of consumer rights associated with HP agreements too. You may be able to return the vehicle once you’ve paid half the cost of the vehicle and not be required to make any more payments, for instance, while your lender will not be in a position to repossess your car without a court order after you’ve paid a third of the entire amount that you owe.
You must understand that you do not own the vehicle until the final payment has been made. Miss a payment or a collection of them and you could well be at risk of losing the car. Likewise, you won’t have a legal right to sell the car until all payments have been made.
Used cars
Although the above may come into play when you’re looking for a new car to buy, the same principles apply when getting a used car. Of course, you can also take out a personal loan when looking for a way to finance a used car.
For used cars, leasing is often an issue. Some dealers will allow their second-hand vehicles to be leased, but not all of them. Many dealers will determine the amount that you have to pay on a monthly basis based on how much they expect the vehicle that’s being leased will depreciate over the finance term you have in mind.
Sources:
https://www.moneyadviceservice.org.uk/en/articles/car-finance-explained
https://www.moneyadviceservice.org.uk/en/articles/whats-the-best-way-to-finance-buying-a-car
https://www.which.co.uk/reviews/new-and-used-cars/article/car-finance-explained
https://www.whatcar.com/advice/buying/car-finance-explained/
https://www.telegraph.co.uk/cars/advice/new-car-finance-options-explained/
https://www.carwow.co.uk/guides/buying/can-i-get-a-used-car-on-finance
