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. Finance options allow you to spread the cost of purchasing a car into more manageable payments. Here are some of the best options for car finance you can consider using.
Hire purchase car finance
Hire purchase (HP) is one of the ways you can buy or finance a car, this will usually be a used car. The most common practice for this type of finance is to begin by paying a deposit for the vehicle you are looking for, then paying off the value of your chosen car plus interest in monthly installments. There will be a loan secured against your car meaning you don’t own the vehicle outright until you have finished paying it off.
Usually, you will pay back hire purchase car finance on a monthly basis, this will be a fixed rate plus interest 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. 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 can offer car finance bad credit no guarantor options. 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 be smaller, or your loan term could be shorter. 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 plus interest 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. 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.
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.
