5 Different Ways to Pay for a New or Used Car
Cars are often big-ticket purchases. Unless you are happy with a rust bucket, chances are you will need to pay several thousand pounds for a decent used car, or a lot more for a brand-new one. It is important to understand that there are several ways to finance the cost of a used or new car purchase. Even people with poor credit histories have options!
Cash
Paying cash is the simplest way to buy a new or used car. Find the car you want and pay in full, using a cheque, debit card, bank transfer, or actual cash. Once the payment has cleared, the car is yours. You won’t be paying any interest on the purchase, so in theory, it is the cheapest option. However, that isn’t always the case.
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Personal Contract Purchase
Personal Contract Purchase (PCP) deals have become increasingly popular in recent years, as they allow people to drive expensive cars for less. The advantage of a PCP deal is that the monthly payments are usually fairly low.
The disadvantage of PCP deals is that you will have a balloon payment at the end of the term; you can either settle this in full and own the car outright, switch your deal to a new vehicle and start the process all over again, or hand the car back and walk away.
Note that there will be mileage limits set at the start of the term and any damage will affect how much you owe at the end of the term.
Hire Purchase
Hire Purchase agreements are a simple way to finance a car purchase. The cost of the purchase is spread over a 2-5 year term and monthly payments are fixed. At the end of the term, the vehicle is yours and there are no further repayments. You can do as many miles as you like and there won’t be any penalties for damage, wear and tear.
A lot of people prefer this method of financing a car purchase, as it is simple and straightforward. You can apply for a car HP loan even with bad credit from a car finance Barnsley specialist like Car Credit Now.
Credit Card
Depending on how expensive the car is, it might be feasible to pop the purchase on a credit card. If you have a credit card with an interest-free promotional term, the purchase won’t cost you any extra. Otherwise, it could prove rather costly, as credit card interest rates are typically around 18 percent APR. If you do use a credit card to finance the purchase, make sure you pay off the balance as quickly as possible.
Also Read: How to Get a Car Loan Without a Co-Signer: A Guide
Personal Loan
Taking out a personal loan from a bank or other lender means you are effectively a cash buyer in the eyes of the dealer. This can sometimes work in your favor if the lender offers you great terms, but there are fewer discounts to be had for cash purchases these days.
Finally, if you decide buying a car isn’t the best option, look into car leasing agreements. They can often be a good deal if you have your heart set on a brand-new car.
