Car Financing

Have your eye on a new car? Is it a dream car or a practical car? Whatever the reason is for buying a new car getting hold of it requires either all the cash up front or some form of financing. Common belief is that a financing a new car purchase invariably ends up costing a lot more. However, there are various ways of actually being able to drive off the lot in a car and using other people’s money enables you to have the car today.

Why borrow?

Of course once you decide on the car you want you could always just save up the money. This is what many people do, but it could be 3 or 4 years away from actually getting enough cash together to get the car. With interest rates as low as they are these days it almost doesn’t make sense not to borrow the money. If you have a couple of grand or are trading in an old car then a couple of hundred pounds a month will buy a ten thousand pound car over 3 or 4 years. When you work out the total payback it isn’t much more than the actual purchase and you get to drive the car today rather than in three years time.

Options Available

The most common way of financing a car is to do a straight forward loan. You borrow the amount necessary and pay it back each month over an agreed number of months. At the end of the term the car is yours to do as you please.

More recently many car companies, which are invariably linked to a financing company to offer the loans, will do a hire purchase agreement. This type of arrangement is quite good as it requires little or no down payment. The basis of the arrangement is that you never really own the car but look to trade in every three or four years. At the end of the term the car has a certain value and you look to roll that value into a new purchase. To make these deals attractive many car companies will look to offer servicing agreements and warranties to enable the value of the car to stay as high as possible. It is popular as you also can trade the car up prior to their being any need to have an MOT carried out. The downside is that if the value of second hand cars drop then there may not be enough value in the car to roll into the next one.

Leasing a car is a common practice for companies that run a fleet of company cars, either for management or for sales staff. The essence of leasing is that you are renting the car. The vehicle doesn’t belong to you or your company at any time. The monthly payment is the rent and regular servicing is normally a prerequisite for the arrangement. At the end of the lease period the car is exchanged for a new vehicle or the contract is just ended. This is a particularly good tax efficient way of companies running a fleet of cars as the value of the car never appears on the books, just the expense of the rental or lease payment.

How to choose

Whichever the option you prefer then contact us and we can assist in the arrangement for you to drive the car today that you have your eye on. Not sure which option suits you best then fill in the contact us details on the site and one of our trained advisers will get back to you with their recommendations.