Car Finances Made Simple: What You Need To Consider


Buying a car is not an easy decision to make when it comes to the finances. Of course, you are overrun by emotion when you are sat in a dealership. You love the car, the feeling you get when driving it is exhilarating, but how do you purchase the car of your dreams? There are many different options, which is why I thought I would simplify some of the most popular ways you can do it. I hope it helps you make that decision to buy a car much easier in the future


A P.C.P agreement, or personal contract purchase, is a great way to finance your car. Whether it is new or used it is designed to allow you to pay lower monthly payments, with little or no deposit to pay. However, it is designed for you to make a decision on your car every two or three years. At the end of the agreement, you have a balance to pay, which is where you can choose to part exchange the vehicle, hand it back or pay it off. The reason you get lower monthly payments is that you only finance part of the car because of the outstanding balance at the end of the agreement. As long as you are aware of the situation fully, it can be a cost effective way to finance your vehicle.

Personal loans

You could always try and pay for the car outright without using any car finance options unless you have the money in the bank, one option would be to obtain a personal loan from the bank. This could provide a decent rate, especially if you have a good history with the bank or your credit file.

Hire purchase

Hire purchase is similar to a personal loan, accept the agreement is on the car as well. Much like a secured loan on a house, this would mean that if you failed to keep up with the repayments, your car could be repossessed. A hire purchase agreement is one of the most common ways to buy a car and see’s you obtaining a loan for the full amount. It could also be seen as one the simplest arrangements to understand.

What if you have bad credit?

Having bad credit doesn’t necessarily mean buying a car is completely out of reach. You just need to consider an alternative option. You can find yourself obtaining adverse credit loans on cars, and it might mean paying a higher interest rate or placing a larger deposit upfront. However, look into your options carefully and decide whether it is affordable. A car is often seen as a necessity so it may have to be an expense you take out. But it could be seen as an opportunity to repair your bad credit score by sticking with payments and completing the loan without any defaults.

Your savings

Finally, if you have savings, you may choose to buy a car outright. However, a car is a depreciating asset and which is why so many people consider financing instead. However you choose to finance your car, make sure you are fully aware of agreements and payments before signing on the dotted line.


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