Helpful tips for buying a car on finance

Helpful tips for buying a car on finance

The process of purchasing a new vehicle has changed greatly over the years. More cars than ever before are now bought on finance, allowing customers more flexibility and freedom when choosing a new vehicle.

Car finance isn’t a recent thing. It has been around for a while, however many people still don’t fully understand how it works. Purchasing a new car should be a fun time, especially if you’re a first time buyer. To help you better understand car finance and minimise stress involved in the process, we’ve decided to put together a short guide containing helpful tips and suggestions.

First, let’s get a better understanding of how car finance actually works, also read more here.

There are two different types of car finance – Hire Purchase (HP) and Personal Contract Purchase (PCP). Depending on what exactly it is you are after, you might find that one or the other suits your personal circumstances best.

Hire Purchase involves you making monthly payments on the vehicle until its full value is paid off. You don’t actually own the vehicle until you make the last payment therefore if you fail to make regular payments on the car, it will simply be repossessed. This is a good option for people with a credit score that’s not perfect. Many people choose hire purchase because it’s seen as a hassle-free and simple option.

Personal Contract Purchase, on the other hand, is the best option for someone with a good credit score. It’s quite similar to hire purchase as you still have to make monthly payments until the vehicle is paid off, however it gives you a lot more freedom and options. The main difference is that once the vehicle is paid off, you can choose whether you want to keep it or exchange it for a new car.

Which option you choose depends entirely on your circumstances. If you have poor credit, then you most likely will be swayed in the direction of hire purchase, however if you’re the type of person who likes changing things up, personal contract purchase will be the option for you.

The most important thing to remember is to do your research. We know we’ve mentioned this before in many of our guides and articles, however we can’t stress it enough. Don’t feel pressured into purchasing a vehicle that you don’t feel comfortable with only because you feel like you have to. Give it some time, do plenty of research and only then agree to go through the process.

Many car finance companies operate in the UK, so shop around. Find one that you are comfortable with and once again, remember to do your research.

We hope you found our short guide helpful. Be sure to check out the rest of our blog for more useful guides and articles about cars and car maintenance and come back soon for even more helpful car maintenance tips.

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