There are a number of options available to drivers who need to finance a new car. Taking out credit for a new car can be a good way of finding the money you need to get the car you want. However this is a big financial commitment when buying a car on finance, so you will need to make sure you make the right choice for your financial circumstances. Make sure you shop around and compare quotes from different lenders. You can get some great deals online these days, so if you do not have access to the Internet it can be worthwhile visiting your local library or Internet café and using the computer facilities to search online car finance deals.
To help you choose the right car finance deal for you here are two of the main options available.
Hire Purchase (HP) Plans
HP is a common way in which you can finance your new car and is available directly from the dealer. This is a very straightforward agreement and once you have chosen the car you want, the dealer will set up a contract for you. This would involve repaying the total sale price of the car plus interest in monthly allocations. Once you have finished the contractual payments the car will be yours. You will often need to pay a deposit when taking out a HP agreement through the dealer and it is always worth considering that if you can afford to pay more towards the deposit your monthly repayments will be lower. One of the great things about HP plans is that they are very convenient. If you have the deposit ready you can choose a car, sign the agreement, pay the deposit and often drive the car away with you that day, subject to underwriting.
Many people use personal loans to finance their next car. Personal loans are familiar credit products which many people feel comfortable with. However, you will need to shop around to get the best deal that you can. Personal loans can be taken out to fund part or all of your car finance. The quicker you can pay off a personal loan the better, as you will pay less interest overall on shorter term loans. However, if your finances are tight then you could benefit from a longer term personal loan. Although this will mean you could pay more interest overall, the monthly repayments will generally be lower. This can put less stress on your monthly budget and still allow you to get the car you want. Personal loans are available from banks, building societies and other financial lenders. It is worth considering that unlike finance arranged through your supplying dealer, Personal Loans, even from your own bank, will usually take much longer to arrange.