Buying a vehicle is not necessarily a simple decision. There is a lot of cash involved. In fact, it can be considered the second most expensive item people get to purchase after a home. Therefore, it is important to ensure you are getting the best deal in terms of financing. Some of the most popular car finance options include:
· Savings or cash
When the rates of interest are low, it is possible the savings in the bank account or building society account is not earning much. Therefore, instead of keeping the savings and borrowing cash at high interest rates, you can consider using some of it to purchase a car. However, make sure you have left some money in the account to cater for emergencies. If you do not have enough savings to purchase a car, they can be used to give you a big deposit.
· Personal loan
If you have a good credit rating, you can consider the option of getting a loan from your bank, a finance provider or building society. Nevertheless, you need to be cautious to make sure your home is not serving as a security for the loan- to avoid putting the home at a risk if you fail to keep repaying. To get the best deals, take the time to shop around. This way, you stand to benefit from the best rates of interest by comparing the annual percentage rate (APR), which features charges that need to be paid out including the interest.
The benefits of the personal loan are many. The loan can be arranged via the internet, over the phone or face-to-face. Furthermore, the loan may cover whole or part of the car's cost. When you shop around, you stand to benefit a great deal from competitive fixed rates of interest.
· Hire purchase (HP)
Financing the purchase of a car through hire purchase is popular with many buyers. Hire purchase is often paid in installments with the payments being spread over a span of 12 to 60 months. Many of the times, the customer needs to make a deposit of about 10%. The car dealers often arrange this type of financing and they are competitive for new vehicles. The car acts as security and thus the customer does not own it until he/she has submitted the last payment.
The method offers several benefits. First, it is easy and quick to arrange. In addition, it attracts a low deposit and competitive fixed rates of interest. Furthermore, this option of financing offers flexible repayment terms, often ranging from 12-60 months.
