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Car finance.

  1. Car finance?

Car finance refers to the various financial aids which allow someone to acquire a car, including car loans and leases.

  • Personal loan

To help you get a car you can take out a loan, and pay a set amount back each month. You have to pay interest on a loan and you will have to pay a fee on the last payment you missed.

  • Hire purchase

Hire purchase agreements need a minimum deposit of 10%, the more you pay in your deposit , the lower you’ll have to pay monthly. With this agreement you hire the car from the car finance company  and once you pay your final payment you then own the car, however, if you miss a payment the car finance company may take the car away.

  • Personal contract purchase

Personal contract purchase agreements require a deposit. Once again, the greater the deposit, the less you’ll have to pay each month. The amount you pay monthly is based off the value of the car you have. If the car is worth more money, you’ll have to pay more each month, but if the car isn’t worth that much you wont have to pay a large amount each month. You can drive a brand new car every couple of years with personal contact purchase, lenders only complete a credit check with this agreement, so you need to check very carefully that you can afford this. Personal contract purchases come with a restriction on the annual mileage, and if you exceed this you could get an expensive fine to pay, per mile driven. If the car isn’t in good condition at the end of a few years when you return it, you could also be fined by the lenders. If you decide to cancel the deal or end it early you must have paid at least half of the cars value.

  • Cash or loan?

If you can afford a car, from savings in your bank account, then it will be cheaper than getting a car on finance. Even if you don’t have the full amount of the car, put what you do have towards the purchase so that you don’t have to borrow as much money.

  • Who can get car finance?

If you have a good credit score, you’re more likely to get the best car loan. With an excellent credit history you will be offered more choices and better interest rates.

  • Credit card?

Its recommended that you don’t use a credit car to buy a car, you could pay the deposit on your credit card, but make sure that you can pay it back, and then use an alternative form of money to pay for the rest of the car.

  • Cost?

Some key factors of car finance that should be considered are;

-The type of loan

-The APR

-Second hand or not

-If your deposit is large or small



-Credit score and history

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