Car Finance
The car that you have your eyes on does not come cheap. Unless you have some savings stashed for it. But in most of the cases, people don’t buy a car with cash upfront. They go for a loan in order to get their hands on that car. There are different
car finance options available for people who are looking to buy a brand new car. You can go through this different options and choose the best one for you which is affordable.
Car Finance Plans for People
Hire Purchase
In Hire purchase car finance, you have to pay a deposit amount upfront. The deposit amount that you have to pay is 10% of the car value. The rest of the amount you have to pay with interest in instalments. You can make the payments over 1 to 5 years according to your availability of funds.
Remember that you don’t get to be the owner of the car until you make the final instalment, as the money is secured against on car. So go for hire purchase only if you can afford the monthly payments. Because if you miss on your payments for few months, the car finance company can take away your car.
Personal Contract Purchase (PCP)
In PCP car finance you have to make an initial deposit of 10%, and pay the rest in monthly instalments. This type of car finance has lower monthly payment amount than hire purchase.
The duration of PCP car finance is between 1 to 3 years. At the end of your agreement, you can choose to keep the car or return it to the company. If you decide to keep the car you would be needed to pay a final settlement price to own it. At the end of your PCP car finance contract, you can also trade your existing car with another different car with new financing options.
PCP agreement consists of a mileage allowance, you should not exceed that otherwise you could be charged extra according to the extra mileage covered. Also, you should maintain the car in a good shape, there should not be any wear and tear damage to the car.
Personal Leasing
In this type of car finance plan, you have to pay a fixed monthly repayment. This fixed instalment is everything included, like servicing and maintenance of the car. When using the car be sure to not exceed the mileage allowance included in the contract. They could charge extra for exceeding the mileage limit so be in bounds of it.
Personal leasing is for people who are not looking to buy a car, they just want to rent it. This car finance option lets you drive different cars, as you are not actually buying a car. The payments that you make can be lower than the PCP car finance.
Read more:
What Are Small Loans?
