Choosing to buy a car is a big decision. From choosing to buy a car outright to getting one on finance, there are many options available to help you make this purchase. It’s likely going to be the most expensive purchase after a house. It’s important that you know all the different options available to you and to ensure that you find the best car finance deal around.
To get a loan, you’ll need to be over 18 years of age and lenders will often have their specific terms and conditions and you can find these out by looking at their websites and researching the company. Only apply for loans that you are eligible for and will likely accept you. Rejected loans will affect your credit score.
There are multiple things you’ll need to look out for when choosing the best car finance rate:
There are numerous types of car finance loans available to help you make sure you’re getting the right one for you.
Hire purchase is one of the most popular ways of financing a car. You’ll need to pay a 10% deposit and then make monthly payments agreed by your finance company over a time period between 1 – 5 years.
This type of loan means that you don’t own the car until the last payment is made.
Hire purchases are usually agreed by the car dealer and are convenient to arrange and are usually available for both new and used cars.
This type of loan is similar to a hire purchase loan but a PCP loan usually requires lower payments. But it’s worth keeping in mind that you’ll usually pay back more overall.
Instead of getting a loan for the full price, you’ll get a loan for the difference between its price as new and the predicted value at the end of the loan. This is based on the annual mileage over the term of the agreement.
When your agreement comes to an end you’ll be presented with three options:
Balloon payments usually range from a few thousand pounds to a much larger sum and are generally larger than your monthly payment. The balloon payment amount is agreed at the beginning of the term so you’ll always be aware of how much the end amount will be.
Within this loan, you’ll pay the dealer a fixed monthly payment which includes servicing and maintenance as long as you don’t exceed the specified amount of mileage agreed at the beginning of the term.
At the end of the contract, you’ll hand the car back to the dealership. Basically the car never really belongs to you.
Leasing usually costs more a month than PCP. You’ll have greater flexibility to switch your car and the cost will generally even itself out due to the maintenance and service costs.
When looking at car finance dealers, it’s generally a wise decision to look around at various financiers and compare deals. Specific websites like Forza Finance will help you get the best deal from a range of lenders so you’ll have all the deals in one place to help you make your decision.
When looking at getting the best deal, you’ll need to remember what your monthly budget is and consider the hidden costs. Before confirming your deal, make sure you read the fine print to ensure that you are aware of all charges.