Finding the Best Way to Purchase Your Next Vehicle

Stepping into a motor dealership can sometimes feel like entering a parallel universe. First there is the amazing array of technical terms describing automotive specifications to deal with. It does not stop there however. Choosing the right way to finance a new car can be just as confusing. There are so many products, each with a different set of pros and cons to consider, that it is easy to feel overwhelmed by the whole experience. This need not be the case however as having just a basic understanding of the different ways in which to finance a vehicle purchase will go a long way towards helping you to make the right decision. The purpose of this short article is to highlight some of your options:

1. Hire Purchase: Under this option you will pay a monthly instalment over a fixed contract period (usually around 42 – 60 months). During the contract period you will have full use of the vehicle but it will still technically be the property of the finance company (or in some cases the dealership) through whom finance was arranged. At the end of the contract period full ownership will revert to you. The main benefits of hire purchase is that it is relatively easy to arrange (it can the done in the dealership in most cases) and the fact that the interest rates are generally quite competitive.

2. Remortgaging: If you have sufficient equity in your house you mortgage provider will, under certain circumstances, allow you to remortgage in order to fund major purchases. The main benefit of this approach is that you will get a very good interest rate when compared to other options. The main disadvantage is that you will spend a very long time paying off your vehicle.

3. Interest-free Finance: Some car dealerships offer interest free finance on brand new vehicles. This is obviously a very attractive option that can save you a great deal of money over the contract period. The main disadvantage of this approach is that it is very difficult to get a discount on the purchase price if you opt for it. It is therefore to ‘crunch the numbers’ to work out whether negotiating a discount and then making use of another finance option would not be more beneficial.

4. Personal Contract Purchase: This is a kind of lease agreement where you make monthly payments allowing you full use of a vehicle over a set period. At the end of the agreement you can hand the vehicle back or make a final payment to purchase the vehicle outright

5. Personal Loan: It is sometimes possible to negotiate a substantial discount if you pay cash for a vehicle. It is possible to make use of this while still financing your car. This can be done through taking out a personal loan through a bank or building society and using the funds to purchase the vehicle. Since the vehicle purchase and the financing are arranged separately it will to all intents and purposes be treated as a cash transaction by the vehicle dealership.

6. Car Loan: Some financial institutions offer products that are specifically aimed at those purchasing vehicles. While essentially a personal loan this kind of product will include certain motoring related benefits (e.g. pre purchase inspection, membership of a breakdown service etc.) to make it more attractive to those buying vehicles.

It should be clear from the above that the options open to those wishing to purchase a new vehicle are varied and aimed at different needs. You should therefore be able, after you’ve done a bit of homework, to find a product that is just right for you in your particular circumstances.

Summary:

There are many different finance option open to those wishing to purchase a new vehicle. These include:

• Hire Purchase
• Remortgaging
• Interest-free Finance
• Personal contract purchase
• Personal Loan
• Car Loan

Featured Products

	Dont pay more. Get a low loan rate from A&L
	Get a secured loan quote