If you are looking for a car finance option, you will find a long list which you can scroll through. Among the notable ones, you will find hire purchase, personal loans, personal contract hire and personal contract plan. Choosing the right one can appear to be a daunting task and looking for an unbiased advice may seem to be even more difficult. However, we are here to impart some impartial car finance advice that we hope can help you with better decision making.
If You Want to Finance with a Personal Loan
Provided you have good enough credit ratings, we would suggest that you should seriously “consider” the option of personal loan to finance your new car.
Why? What’s the advantage of opting for a personal loan?
The reason is simple: you get to own the car immediately and if something goes wrong in future, you can sell it off to cope up with any financial gaps. Furthermore, with personal loans your monthly payments may seem a bit higher but the overall amount you pay is much lesser than what you would have to pay through other car financing modes.
And is there anything else to take into account?
Yes! A personal loan for a car, although secured with the purpose of financing your car, does affect your overall credit line which may influence your chances of securing, let’s say a mortgage. Not only that, with a personal loan your lender is not at all bothered about what you would be doing with it. If a dispute arises with one of the car dealers, you will have to sort it out yourself.
This could be complicated. Let me look at other options.
My Hire Purchase Option, What About That?
Yes it may offer a comparatively lower monthly payment option than the personal loan, it is secured only against your car, offers you no mileage restriction unlike PCP or PCH and it also protects you over any dispute with the manufacturer, but it also harbor few traps.
How? This seems like the perfect option. Plus I get to lower the interest rate further by increasing the term of payment.
You do have a point. But it is important to note that more you use a car, chances are that you will have to spend more on its maintenance. You can end up paying a lot more than what you would have initially paid over a shorter length of term. And remember, you cannot sell or own that car unless you clear all your payments.
Then PCP Must Be the One!
That depends. With the lowest monthly payment amongst all modes, it has a large sting in its tail with that balloon payment. Plus you would also have to pay extra charges if you exceed on the pre-agreed mileage. However it gives you the option of switching your car if you are not pleased with what you have. And unlike PCH, you can actually choose to own the car at the end of agreement.
Some General Advice
With the specifics covered we would now like to give some general advice. Always test drive the car that you want to own. And use your credit card to make the monthly payments for your car finance as it gives you extra protection on payment. On a closing note, whichever option you decide for, remember to read the papers thoroughly and not just buy into what the dealer has to say.