When it comes to buying a car there are a few different options to consider for car finance if you don’t want to buy your car outright straightaway. With most finance options you will manage to pay your car off after a set period of time, then you will own it outright. Here are some of the best options for car finance you can consider using.
Hire purchase car finance
Hire purchase (HP) car finance is effectively a loan that is equal to the total value of the car you’re going to get and on finance this will be a used car. You will need to minus your deposit of the amount, so overall the hire purchase car finance is the total value of the car, minus the first deposit. Usually, you will pay back hire purchase car finance on a monthly basis, this will be a fixed rate and you will agree how quickly you’d like to pay it back.
Some people decide to pay it back over 1 year and others can take up to 7 years. Car finance companies don’t usually offer over 7 years to get this paid back. The quicker you pay it back, the better for you as you will own your car outright when the repayments have finished.
Some car finance companies are willing to be flexible with the amount they’re financing and they manage to offer a car finance bad credit no guarantor option. The deposit amount will differ from company to company, but it is usually around 10% of the car’s total value. If you can afford to pay off a big chunk at the beginning, your monthly repayments will obviously be smaller. This will just depend on how much you can afford to put down as a deposit at the beginning.
Benefits of hire purchase car finance
There are lots of benefits of using hire purchase finance, one of the main ones being you can pay back the cost a bit every month, spreading the cost out is helpful for many people who get paid on a monthly basis. The fact that monthly payments are a fixed amount is useful as you won’t forget how much you need to pay off and it will become a routine and fixed bill, like paying off your phone every month for example. You will also be offered a newer car with a higher specification if you go for hire purchase finance, who wouldn’t want this? At the end of the day, you will have the opportunity to own the car outright and you have options to get accepted without having a perfect credit score.
Leasing and personal contract payments
There are other options like leasing and personal contract payments (PCP) when it comes to car finance. Leasing entails handing back the keys at the end of your deal, you will also pay monthly installments for this option but you don’t keep the car in the end. However, you can take out another car lease at the end of your agreement if you want to.
If you go for the PCP finance option, when you have finished your agreement you can either give the car back or pay what it’s worth at that current time, this is known as a balloon payment. Unlike hire purchase finance where the car is yours at the end of the agreement, with no extra costs at all.
Now you know there are definitely enough options available to get a car if you don’t have the cash in your bank at this particular moment in time. It is up to you which car finance you think suits you and your wallet most. It’s crucial to research before setting your car finance in stone and make sure you take the car for a test drive before filling out all the paperwork.