The best ways to finance buying a car

car windshield

(© Yuri Bizgaimer – stock.adobe.com)

So, you have set your sights on getting your own car. If you have saved enough, you can pay the entire amount at one go and not have to worry about anything. But the average person might not have that much money. If you too belong to that group, then you need not fret. Have a look at the various options that you have and decide for yourself.

1. Loan

Get a loan from a bank or any other finance company. If you have a good credit history, this option can turn out to be the cheapest. To get the best interest rate on your loan, you may need to look at different options. NowLoan can help you find the best lender.

Pros

  • You get the ownership right from the start
  • Formalities can be done online

Cons

  • Requires good credit history
  • It can affect your ability to borrow more

2. Personal Contract Purchase

At the start, you pay a deposit. After that, you need to pay a monthly payment for a period of 2 to 4 years. Once the contract ends, you can pay a final amount of money and buy the car. Or, you can exchange the car for a new one and continue as usual. Or, you could simply not continue any further and return the car.

Pros

  • Greater choice after the end of the contract
  • Flexibility in terms of payment

Cons

  • You may have to pay extra for mileage higher than a certain limit
  • More tear and wear can result in higher charges

3. Personal Contract Hire/Lease

If you simply want to hire a car and not buy it, then this method can turn out to be cheaper. Under this process, you provide a deposit. You continue to pay monthly installments until the end of the lease contract. Once the contract ends, you need to hand the car back.

Pros

  • Flexibility in terms of payment
  • Monthly payment includes servicing and maintenance costs

Cons

  • Deposit needed of 3 months payment
  • In the end, you have to give up the car

4. Hire purchase

In this payment option, you are hiring the car until you finish paying the whole amount. Once the last instalment is paid, the ownership of the car transforms to you. First, you need to pay a deposit of around 10% of the price. Then, you need to pay a monthly instalment for a certain period.

Pros

  • No extra charges for wear and tear or mileage
  • Flexibility in duration

Cons

  • You will get ownership only after you have paid the final instalment
  • The monthly payment is higher than other options

Conclusion

Each of the options listed above has its advantages and disadvantages. You will need to look into the ones that are most suitable for your needs. Calculate the total cost by including the deposit and each monthly payment. Know about extra or hidden charges you may have to pay. You can get in touch with a trusted broker Upmoney online to get the most suitable lender and easily get that dream car.


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