Car Financing Options
If you're hoping to buy your car with car financing, might as well get to know your options. There is no one best option, after all. The right type usually depends on what you need and want. When it comes to car financing, there are several choices that you need to look at a little more closely so you'll end up with a loan where you get the best end of the deal.
First, let's look at the common categories of loans or financing. They are the personal loans, dealer finance and leasing deals.
Personal loans are the options to check out if you're planning to finance your car independently. Going this route means you're borrowing money from high street banks or online lenders. Like any other loan, you'll need to pay month at a set interest rate.
Since we are talking about cars here, the most common category of financing is that offered by dealerships. This category is further divided into different types including hire purchase, personal contract plan and 0% leasing.
Hire purchase is ideal for people who want a simple option. For this one, you'll just need to pay 10% of the vehicle's price at typical APR of 7% to 13%. You don't own the car until the financing has been fully paid.
The other type is called the personal contract plan which is great for people who want low monthly repayments and those who switch cars every four years. The typical APR is from 7 to 14% and to get started, you'll need to pay a deposit then the monthly repayments.
If you have cash and you can afford to pay a large deposit then the 0% finance option is best for you. The main advantage, of course, is the fact that it does not include any interest.
Aside from dealership offers and personal loans, there are also leasing options. If you don't want to own the car, you can lease it instead. To avail of this option, you'll pay a deposit and the monthly payments for the succeeding months of the lease term.