A car has different meaning for different people. While the younger generation enjoy thrilling, high speed drives in trendy cars, matured people hope reaching their destinations quite safely and easily. But the concept of a car has changed so much. Today for many a car is much more than a vehicle that leads to their destination. To possess a car is considered a status symbol and is an indication of the prestige of any business.
In the past only those who possessed ready cash could buy an expensive car, but the situation has definitely improved today. Now a day, car lenders offer many finance products at attractive rates to woo the buyers and to stand apart and maximize profit in the highly competitive market. The outcome has been very positive with so many now finding it easy to buy their dream cars. It is estimated that about four in ten personal loans availed in UK are for buying cars. Brits buy more than nine million cars each year. After house, purchasing a car is considered as a major investment by many.
Many kinds of financing options are available in the car market depending upon the cost of the car and your repayment capacity. One such option is PCP or personal contract purchase in which an initial deposit is submitted initially followed by monthly installments. At the end of the contract period the final lump sum amount is paid and the car becomes yours. You can also switch over to another car and continue making repayments or simply return the car to the owner. But be careful- since you don’t own the car during the contract period, so any default in repayments and the car may be repossessed. The second option is Hire Purchase. This is almost similar to a bank loan in which you pay monthly repayments for a fixed time period and at the end of the agreement the car is yours. Contract Hire financing gives any business the freedom to lease out new cars without buying them. With monthly rentals new cars can be leased at cheaper rates.
All of the above options have many pros and cons. While a PCP loan keeps your monthly payments lower than a personal loan; a personal loan has the lowest annual percentage rate among various car finance options and doesn’t have any arrangement fees. The disadvantage with HP is that you don’t own the car during the hire period.
Any one with a good credit rating can easily get standard bank loan and it gives you the freedom to purchase your car from anywhere you like. Direct lending is also possible with financing companies and credit unions. Secured car loans may require you to pledge your property against the loan amount. Bad credit car loans are available at higher interest rates with private dealers and financing companies. But they may require you to buy car from a certain dealer. The most common type of car financing involves the dealer and the buyer. A contract is fixed and the buyer agrees to pay the amount financed plus interest for a fixed period. The dealer usually sells the dealership to a bank or financing company which then manages the repayments.
Buying a car is an important decision. First of all you have to decide what you want and how much payment you can afford. See whether the loan product includes any protection insurance. Look for established firms with good reputation. Many online financiers have car loan calculators for comparing various deals. Know in advance the total amount payable at the end of the loan period. Go online with a specialist broker if you are in doubt .Although buying privately could save money, it is more risky than buying from a dealer as you get no protection of law. Take advantage of the free test drives offered by the dealers. Make sure that the car is in excellent condition. In case you’re exchanging your old car please be aware if it’s true worth. And before you sign any contract make sure that you have a clear idea about the terms and conditions.