What Car Finance Options I Have to Consider? A Comparative Analysis
Almost every
person wants to ride in their dream car. They try their level best to purchase
the best car to satisfy their desires. Yet, not everyone is capable one to buy
a new car with full payment, as they have to approach finance deals.
Due to the
increasing demand for car finance, it has become a profitable business,
especially in the UK. Several car finance companies come up with car finance
deals for both new and used ones.
For instance,
you can see dealer finance, credit card, leasing and loans from banks or direct
lenders.
Why Car
Finance has become a necessity?
Gone are the
days when someone having a £9000 as cash would purchase a car with the same
amount. Nowadays, such an amount is only used as the car deposit, and the rest
of the amount is transferred into monthly payments for a specific period.
Yes, there are
some advantages of car finance, such as:
↠ You do not have to spend a big amount at
one time;
↠ Monthly instalments will not hurt your
regular family expenses;
↠ You do not feel disappointed too much if
your car gets stolen.
At the same
time, we cannot underestimate the role of car finance dealers. They are
advertising their deals especially mentioning guaranteed
car finance in Glasgow or Manchester or any other UK city.
People get
attracted to these deals, and they purchase a car through different financial
options.
A Variety of
Car Finance Alternatives Available in the Market
The process to
finance a car is nothing complicated. Many times you are not able to make the
car purchase without paying the full amount.
With finance
options, they can still buy their loved car with a small deposit and paying the
pending amount in easy monthly instalments in scheduled time.
Indeed, car
finance providers have the advantage of earning interest and grow their income.
Nevertheless,
here are a few car finance options in which you can decide the most suitable
one:
Hire Purchase
The concept of
car hire purchase runs according to the mortgage. It is where you have to pay a
certain amount of deposit upfront and pay the remaining amount for a confirmed
duration. This period can be from 2 years to 5 years.
Once you pay the
whole amount or the complete monthly instalments, the car becomes yours
officially.
In hire
purchase, you have the liberty to choose the deposit amount and the term
according to your capacity and requirements.
If the situation
goes against your favour between the scheduled payments, you can cancel the
agreement with your financer. There is a disadvantage of Hire Purchase, as it
can reduce the value of the car as time goes ahead.
Personal Contract Purchase
Personal
Contract Purchase or PCP is also a very popular car finance option. Several car
manufacturer companies practice this mode of financing, such as BMW, Volkswagen
and many more.
It has been
found that dealers try to attract car buyers towards PCP in comparison to Hire
Purchase. It is because they have better earning opportunity with PCP.
In this car
finance option, you pay a deposit and another amount in monthly instalments,
like HP. However, monthly payments remain on the shorter side, and the duration
is comparatively smaller too.
But here, you
will not pay the whole amount of the car, but at the same time, you do not owe
the car as well.
If you give the
car back to the manufacturer, you do not have to pay the pending amount.
Car Finance from Direct Lenders
There is another
popular option of car finance comes from the private lenders in the UK. Here
bank loans are also available, but these have the cumbersome procedure, and
instant approval may not be there.
The direct
lenders seem more flexible in their terms. For instance, many people have the
issue of poor credit scores. Traditional lenders may not consider them as a lot
of risks involved.
The direct
lenders consider their applications with carfinance on soft search. It allows borrowers to get approval without
leaving any search footprint to their credit profiles.
Instant
approval, same day fund disbursal, and flexible repayments are some advantages
lenders bring with their car finance deals.
The Final Talk
Multiple options
are there for car finance, but you should choose only one suitable for your
finances. The latter option of car finance from private lenders may look
better, as it is easy to get and repay.
Emma Anderson is a financial author and dedicates her article
to different car finance options, such as Hire Purchase, Personal Contract
Purchase and Car loans from private lenders.
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