Car Finance Deals: What You Need to Know
For the large percentage of motorists, the best way to go about obtaining a new automobile is a finance deal. There are not many that can pay for a car upfront without it having a huge impact on their financial situation, so a finance deal allows you to spread the cost over a pre-determined period to make it easier to manage.
There are a number of different finance deals to consider though, so here is a quick look at each type:
Hire Purchase
A Hire Purchase (HP) deal involves paying a deposit of around 10% and then making fixed monthly payments over a pre-determined period. Once the final payment has been made, you will then technically own the vehicle. It is not yours before this and the loan is secured against the car, so it could be taken away from you if you miss a payment.
Personal Contract Purchase
Personal contract purchase (PCP) is similar to HP but provides motorists with a few options at the end of the agreement. You can either return the keys (and take out another agreement), pay the resale value (balloon payment) and keep it or use the resale value towards a new vehicle. This is, typically, more expensive but provides great flexibility.
Personal Contract Hire
Personal contract hire, or PCH, is different in that you never technically own the car. Although it is not yours to own, these deals are typically cheaper and allow you to take out a new lease every few years. There will be certain restrictions and limitations in place, such as annual mileage limits, where you will have to pay a fee if you exceed these.
Deciding on a Finance Deal
These are the main types of car finance deals for you to consider, each with their own advantages and drawbacks. What is best for you will depend on your own particular needs and financial situation, but you should always carefully consider each type before making a decision. In addition to this, you should also always visit reputable dealerships, like AA Cars, for the best possible deals and range of finance options.
Buying a car is a huge investment, so many people need to arrange a finance deal to make it easier to budget for. There are a range of different types to consider and you will need to think about how much you can afford to pay in monthly payments, but it can be a fantastic way to get behind the wheel of a new vehicle.
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