Car Finance Options in the UK

With such a wide range of car finance options available today, car financing can be a much painful than you thought. Questions like whether you should go for a personal loan or with a manufacturer’s deal or part-exchange your current vehicle further adds to the problems. Have a heart, now here are some of the options by way of which you can raise finance to achieve you dream machine, read on:

• Hire Purchase : In hire purchase, although interest rates vary, but can be quite competitive against bank loans. This option by dealers is offered on new and used cars. Though this loan is easily available, however, you do not own the car until the final payment is done, which means you cannot sell the vehicle until you have settled your loan.

• Remortgage : If you’re sensible you wouldn’t pay for your car over the next 10-20 years, especially when remortgaging being the cheapest way to borrow (unless you get interest-free finance). More so, if you’re a homeowner, most mortgage companies will allow you to borrow for more than one purchase.

• Interest–free Finance : Interest-free finance can be availed from car dealers and are only for brand new cars. It is the ideal way of having a brand new car without paying interest on any finance. But getting interest–free finance and a discount at the same time can be quite a task.

• Personal Contract Purchase : Monthly payments from your bank account are spread out over a pre-defined period (normally 2 to 4 years). At the end of the period, you either make a lump sum payment to purchase the car outright, or you hand it back.

• Personal Loan : Personal loan can be arranged via banks, building societies and finance houses. This loan can be arranged along with the purchase of a car, meaning that you’re a ‘cash’ buyer in the eyes of a dealer.

• Car Loan : Similar to personal loan, only benefit here is that you may get additional benefits such as payment 'holidays' or a free car inspection prior to purchase.