What Car Finance Options I Have to Consider? A Comparative Analysisby Emma Anderson Short Term Loan Solutions with Loan
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.
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.
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:
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 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.
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 car finance 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.
Created on Apr 19th 2021 06:06. Viewed 383 times.