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What type of car finance should I get?

What type of car finance should I get?

8 January 2021
What type of car finance should I get?

Most new car purchases are made with financing and getting the right deal can seem daunting. There are several options to choose from, all of which have their pros and cons:

– Hire purchase
A personal car loan
– Personal contract purchase/plan (PCP)
– Personal contract hire/leasing (PCH)

Before you buy, it makes sense to do your research on the best option for your budget. If you’re looking to upgrade your car in a few years time then you might try PCH. If you’re looking to buy outright then you can use dealer or personal finance. Read on to find the best motor finance option for you.

Hire Purchase

If you’re buying a new or used car outright, this is the most straightforward option.

– Loan secured against the value of the car
– You own the car when you make the last payment
– You’ll typically pay a deposit of 10% plus monthly instalments and interest

What to watch out for: May be more expensive than a personal loan and your car can be repossessed if you miss a payment.
Best for: Drivers who want to own outright.

Personal Contract Purchase (PCP)

If you’re looking for a new car, PCP is a loan that takes into account depreciation for low repayments.

– You’ll pay a deposit then low fixed monthly payments
– At the end of the contract you can buy, return or sell to finance another car
– Based on a minimum guaranteed future value (MGFV) for your car to keep payments low

What to watch out for: Stick to mileage limits and keep the car in good condition.
Best for: Changing your car regularly.

Personal Contract Hire (PCH)

If you’re a business user, PCH lets you rent the latest makes and models for your fleet.

– Like PCP but with no option to own the car
– Type of car, agreed mileage and length of contract determines your monthly payments which are generally lower than with PCP
– You’ll have to pay three months rental in advance
– Servicing, breakdown, road tax and a warranty may be included, making it easy to budget

What to watch out for: You’ll have to make a large upfront payment and mileage limits may apply. Always compare car loans before you commit.
Good for: Getting a brand new vehicle every few years.

Personal loans

If your savings aren’t enough to pay cash upfront, a loan could help you buy that dream car. You’ll have three options:

– Bank loan
– Credit card
– Borrow against your property

You’ll need a good credit rating and the discipline to make regular repayments. If you borrow against your property, your home could be put at risk, and you’ll often find you pay extra fees or higher rates for your borrowing.

How to get the best car finance deal

Getting the best finance deal on thousands of cars is as easy as one, two, three:

1. Use our quick and easy form to get an instant decision 24/7 that won’t impact your credit rating
2. Choose a car from any dealer nationwide and we’ll handle the payment for you
3. Drive off into the sunset in your new car

Before you commit, just plug your details into our car finance calculator to find out your monthly repayments on the car of your choice.

At Car Loans UK, we can get you the best deal on your car loan, even if you’ve been refused elsewhere. We understand the hassle of car finance bad credit ratings and finding the right deal which is why we do all the hard work for you.

Ready to make car finance simple? Set your budget and get a quote today.


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