If you’re considering buying a new car, there’s a dizzying array of buying options. It can be daunting seeing all the options initially, but there’s an arrangement for most financial situations that people are in. Below, we explore the best car buying options for you.
Buying in full
Buying in full is the simplest arrangement, but you’ll need to be able to comfortably afford to pay the full fee up front. This is handy for cars under £5,000 but can be difficult with more expensive cars. However, if you have the money, it’s worth it. Buying a car outright is cheaper because you’ll avoid having to pay any loan interest or additional costs that are associated with a long-term car financing arrangement. If you wish to buy the car in full but don’t currently have the funds, you could consider a bank loan for a car to make payment in full possible.
Financing
If you’re not comfortable paying for the full price of the car up front, then you could go for a financing arrangement. This is where you pay for the car in instalments over a period of a few years. The downside is that you’ll have to pay interest on the total value of the car during your repayment period, meaning that in the long-term this is a more expensive option. On the upside, you can choose a more expensive car and break the full payment down into more manageable costs on a monthly basis.
Leasing
There are cheaper options available if you don’t mind not owning the car. One of these is a lease. This is a much cheaper arrangement compared to buying the car, and you still get full use. On the other hand, as you don’t own the car, you won’t be able to sell it at the endof your lease agreement. This means that all your payments aren’t going towards securing an asset and you aren’t building equity.
PCP
A personal contract payment is a more flexible form of lease. With this arrangement you’ll take out another lease on the car. However, half way through your deal you’ll have a choice: either you can pay the remaining price to own the car outright, or you can opt to give the car back. This is a useful arrangement if you’re unsure whether you’d like the vehicle in the long-term.
Reducing the overall cost
There are other steps you can take to reduce the overall cost of the car too. Buying a used car is one of the most obvious steps. Cars depreciate significantly in their first three years – by purchasing a vehicle that’s older than three years you can avoid taking this hit. At the same time, you should search for cars with good fuel efficiency to lower your running costs.
Buying a car is an exciting moment. However, you should always look into the various car payment options, making sure that you choose the right method that suits your finances and matches the way you’d like to purchase the car.
