Car Finance

Statistics have shown that two of every five personal loans in the UK are targeted at buying cars. Acquiring a car is probably the next investment target after a house. While some are able to buy brand new vehicles, others make do with the used ones. And unlike in the past where you can only buy a car after you have fully gathered the total  sum needed, there are a number of car finance options available today that help people to buy their dream cars even without having ready cash for the purchase.

There are a number of car financing options as stated earlier, with these options largely dependent on the type of the car, the cost involved, and of course, the repayment capacity of the buyer. From buying from the car manufacturer to getting a car loan from the bank, and even visiting an auction place, different buyers source for their dream cars differently.

The PCP or Personal Contract Purchase is one of the available car finance options. Here, the buyer of the car makes an initial deposit, after which the remainder of the purchase price is paid in monthly instalments. Once the payment, the ownership of the car is fully transferred to the buyer. Using this option however requires some care especially as it concerns defaults as this could lead to the finance company repossessing the car.

The Hire Purchase option is another car finance option that can be used in acquiring a vehicle. It is similar to the bank loan as monthly repayments are made for a particular period agreed between the buyer and the seller and at the completion of the payment; the car becomes that of the buyer.

Banks would usually consider a person’s credit report in order to determine whether or not to grant a car loan. People with good credit report therefore find it easy to get bank loans and because they are able to buy their car from anywhere, many people go for this option. Finance companies and credit unions also provide the direct lending facility and people make use of this to finance their car purchase.

The options mentioned above are just some of the different ways people finance their car purchase. It is however worth noting that they all have their merits and demerits. It is therefore advised that intending car owners carefully shop around for the different car finance deals and options before deciding on a particular one.