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When people are looking for a new car it is very likely that they will shop around for the best deal and compare different makes and models. A lot of time and research will go into trying to ensure that the best car is chosen for the best price and hopefully a great deal will be found. However, if the same time and effort is not put into finding the best finance option for the car you could end up neutralising the great price that you found for the car itself.
A Hire Purchase Plan is where you pay a deposit and then commit to monthly payments over a set number of years. You are in possession of the car from the start of the plan but the car does not belong to you until all payments have been made. This means that you are unable to sell the car until the end of the payment plan. All payments will be the same other than the first and last payments which are often a bit more.
Keep in mind that ending the agreement early is likely to result in having to pay a fine and the car could be repossessed if you fall behind on payments. This kind of payment plans do not always have the best interest rates either so make sure that you shop around before committing.
An alternative to this is to take out a personal loan and pay for the car up front. You can then pay off this loan in monthly instalments as you would in a Hire Purchase Plan. You should compare this option when looking at interest rates as they may be lower than those in a Hire Purchase Plan which could save you money in the long run. There is also the option, when financing a car using a personal loan, to sell the car if you are struggling with repayments and use the money to pay of the remaining loan.
If you are looking to get a brand new car you may also have the option to sign up to a leasing agreement which is basically a long term rental contract. There are two types of leasing agreement for financing a car. The first is Personal Contract Hire where you pay monthly to hire the car but never fully buy it. On this agreement you will be given a new car every few years but will never own one. The second type of leasing agreement is Personal Contract Purchase. For this agreement you pay to hire the car and then pay an amount at the end of the agreement in order to own the car yourself.
With these different options available for financing a car it is important to put as much care into researching these as you will into researching the car itself. Otherwise you could end up paying more than you wanted to and that bargain that you found may not turn out to be a bargain after all!
If you think that a loan would be the best option for you please contact www.Best4Loans.com and complete their short online form for a quick and easy loan comparison. You can also call them on 0844 344 5177.
By Sasha Davison
28th January 2014
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