Buying a car is probably one of your biggest financial investments. Maybe you have enough money to buy your car outright, but more likely you will need to look at ways of financing your new purchase.
If you’re buying through a dealership, such as Jennings Ford Direct there will be some dealer finance options available to you, and speaking to the dealer direct will help you to secure the finance deal that’s right for you.
Most banks and other lenders offer personal loans, either specifically for cars or for more general purposes. Although, depending on your credit rating, you’ll probably find a number of options for car loans and you’ll be able to browse online to find the best deal, it could affect other borrowing you need to make.
Some dealers may offer you the option to take on a personal lease arrangement. In this type of deal, you make a monthly payment and, providing you don’t exceed the mileage which is usually stipulated as part of the deal, you hand the car back at the end of the term and take on a new deal. This type of arrangement means you update your car every few years and some schemes even have servicing as part of the loan. However, you never fully own the vehicle, simply ‘hire’ it.
In the same way as personal leasing, you’ll pay an amount every month, but at the end of the term you should have paid off the full cost of the car and the finance and it will be yours.
It’s easy to compare credit cards online and find a good deal, but the interest rate is often much higher than other options and, if you only pay off the minimum amount every month, you could end up paying the car off over a very long time. It will also very much depend on the value of the car you’re buying. As moneysavingexpert.com explains; “The most important factor here is your credit limit. Credit cards won’t usually give you more than £5,000, and that’s provided that you have a good credit score. So if what you need to buy is more expensive, you’re probably better off looking for a loan.”
If you’re in no rush and have the time to save up, you could save and buy your car in full. The main benefit is that you’ll own the car outright, but you may decide it’ll take you too long to save up for the car you want.
As with any form of borrowing you should always make sure you can afford the monthly payments. The Money Advice Service has a free, online car costs calculator which can help you understand all potential costs in full. Always compare all options available and look at which works best for you – and remember to work out the full cost over the full term of whichever deal you choose.