How to finance your new dream car?

A new car is certainly a dream for many of us. Though, it is not easy to purchase a new model car without having proper financial condition. However, there are different car financing options available once you have decided a specific model of car for purchasing. You may often get confused while trying to get the most convenient deal in case of buying a new car. Here, you will be able to know about some of the most popular financing options that have been available in most of the famous motor dealerships. However, there are mainly two types of categories of products. Purchase agreements basically offer you an opportunity of owning the car at the final term of the agreement after paying all outstanding repayments. Lease agreements will provide you the permission of using the car for the definite duration of the agreement, but you need to return back to the finance company or the dealership after completing the term.

1. Personal Loan

Personal loan for car is one of the most common forms of purchasing new cars as many of the customers do not have an adequate amount of money to buy instantly. Here, customers get these personal loans from a bank or other financial institutions. Here, you can pay the auto dealers or private seller the required amount and repay the loan to the lender. Besides, you own the car from beginning and you will have to pay for every servicing or repairing. Moreover, you have also the chance of selling the car whenever you want to. In this case, you will have to continue giving payments to the financial institution or bank until the total amount of loan is paid off.

2. Conditional Sale or Hire Purchase processing system

In this case, you agree to get a definite amount as a loan from the dealer, the value of any type of car or lesser cash deposit have been offered as a part of exchanging. After making the agreement, the dealer will contact with the motor finance company in order to pay the price for the car on behalf of you. Once the application gets the approval, you can repay on a monthly basis for the definite length of the agreement with that particular motor finance company. However, you need to know that, you will not be an owner of that car until you pay the whole loan. In some of the hire purchase agreements, you may find out the last repayment is significantly higher as you have paid the rest of the amount in a lower monthly installment. This is also referred as the lease purchase.

3. PCP (Personal Contract Purchase)

While using the PCP scheme, you can make the agreement with the dealer to borrow a definite amount, excluding the value of part exchanging vehicles and any deposit payment. After that, your dealer will make contact with the motor finance company to pass the credit checks and pay for the car on behalf of yourself. Here, you will be to provide a lower monthly payment to that particular finance company and make the car more affordable for yourself through delaying some of the cost until the final term of the agreement. Besides, you will only need to pay for the difference between the deferred amount and the full loan along with an interest charge during the period of agreement. Moreover, at the time of completing the agreement, you will get three definite options such as paying off the deferred amount of money in full in order to own the car outright, handing the key of the car back to your dealer and then walk away or you can make a switch with a new model car and utilize some of the raised money in order to pay the deferred amount.

4. Personal Contract Hire or Personal Leasing

Through this scheme, you will be able to make the agreement with the dealer for paying a fixed monthly installment in order to purchase a new car. This basically includes all types of services and maintenance costs over the definite period of time. After making the agreement, your dealer will contact with the financial institution that pays for the car on behalf of yourself. Then, you will need to pay to the finance company a fixed monthly installment until completing the agreement when you have to hand back the car to the dealer or directly to the finance company in some cases. Here, you will not get an option for purchasing the car. In these types of agreements, you will need to be slightly careful not to overlap the agreed contract mileage.

5. Mortgage top up process

In this type of scheme, you will be able to take a loan from your mortgage provider either through withdrawing a definite amount from your house or by taking up a second mortgage in order fulfill the amount that may need to buy a car. Here, you will be assure of the amount you need to borrow and your will be responsible for paying all types of repairing or servicing. Besides, you can also sell your car whenever you prefer to do so. Moreover, you can make payments for the loan through mortgage repayments. However, you need to remember that, you house can be at risk of losing if you can not do the repayments on time.

Hope you liked the idea!