That is great!
In the UK, you get many options to finance your car. You get dealers to forums to a lot of other units wherefrom you can purchase and own your car.
However, you should take a breath before doing that.
It is because where there are so many options, there might be a chance of getting confused.
And that confusion can delay the process of your car purchase. You can get attractive deals, fantastic purchase facilities, and wonderful perks from your dealer but ultimately end up not deciding on the matter.
Well, you have to decide now.
To do that, you have got to know how the country’s car financing system works.
In the UK, you get attractive car financing schemes to help you with your budget. You can definitely make a sound decision when you know what car finance schemes mean to you.
Therefore, it is time for you to go ahead and learn these matters to make an informed decision and bring your car home.
Without further ado, let’s get started.
What Car Finance Options Exist for a UK Person?
You have the right to know them because you are probably going to get a student car finance deal from a direct lender to book your first car.
Even after the car finance deals and your worthy selection, these options we are talking about can offer you a better standpoint in saving you some money.
Some good money, that is!
So, here are those car finance options for you. Know them and find out the most suitable one for you in the UK.
- Personal Contract Purchase/ PCP
This one is known as the one option that most people are going to use if they are in the mindset of changing their cars often.
Some people have this habit. And there may be obvious reasons for that.
Changing your phone and changing your car is not the way you think.
A phone can be changed almost anytime you want, and they are not as expensive as a car. Changing a car, however, is packed with formalities.
These formalities take time.
In that regard, it is time for you to find something like the personal contract purchase or the PCP.
You need to make instalment payments.
Instead, following this way, you can keep on making the instalments reach your dealer or forum manager until you make a lump sum payment. You also refer to this as balloon payments. By making this payment;
With this option, you get the Minimum Guaranteed Future Value (MGMV).
But you need to be careful, though.
As a matter of fact, you can keep on making these payments and enjoy having the car. But you need to keep the car in working condition and cannot inflict damage to it until you make the balloon payment to make the car yours.
With that in mind, you can make even more developments to this.
If you talk to your dealer or forum manager about making the instalments on a regular basis with, of course, a fixed price, then that would be even better.
But again, please do not inflict damage on the vehicle as that can screw you up.
You need to give your car dealer penalties you never ever like.
Although it is a cost-effective option for other cars, it is kind of a way where you need to be careful.
And that’s okay. Talk to your direct lender too about the lump sum payment amount if you cannot manage it.
But the perks are good. You may return the car back or aim to sell it…your choice.
- Hire Purchase/ HP
Look, it is just the opposite of the personal contact purchase option. It has its perks, and it again has its limitations.
But again, that is okay.
As its name suggests, a hire purchase is the kind of purchase where you rent the car with a down payment first.
When your payments in the form of instalments get over, you are allowed to own the car.
So, you make a down payment of 10% of the price of the car at the very first. And then you will pay those instalments until you finish off all the payments on the car.
You are then given the authority of the car, but your dealer may repossess the car at any moment if you miss paying one instalment.
This is why you should go for a direct lender option for car finance with no credit check because these car loans can help you get the car that you want without thinking about all these troubles and worries of missed payments.
You take the money from a direct lender, and you use it for the instalments. Or, in other cases, you can take a short-term loan to pay the 10% down payment and then carry on with the instalments yourself.
These loans are personal loans. There are no such worries about collateral. You can easily repay it back in flexible loan terms using your income.
This flexibility in instalment payments might not be present in your car dealer’s offer. No offence to them, but direct lenders can help you more extensively in this department.
With that being said, we are going to go to the next point:
- Personal Leasing
Also known as contract hire, this option works pretty well in maintaining your car and helps you with the payment option when you need to change it.
Now, this is not the frequent changing of your car. In this way, changing the car is easier than the other ways mentioned.
It is quite close to PCP.
However, PCP lets you own the car. This, as its name suggests, is not going to let you own the car. You have to pay months’ instalments in advance for using the car.
Again this payment can be large. But do not worry. We have already talked of direct lenders, didn’t we?
In this scheme, you will have mileage limitations. You cannot damage the car, and if you do, then you need to pay charges for it.
It is found as quite a popular scheme for those who don’t want to get attached with the car, but they are going to use it for travelling or commercial purposes.
One good thing about this option is that the servicing of the car is included in the offer. You probably do not have to pay for this.
But as dealers say repeatedly, you must do proper research on how these cars are used after making the advanced instalments. This is an alternative option where you are actually renting the car. Therefore, go through the details of the car finance deal thoroughly and make sure you have understood all the terms and conditions needed. It will make you more comfortable in deciding whether or not you would like to go with this option or that you are going to choose one of the two options mentioned beforehand.
There may be other things to know, such as add-on charges.
So, make a good conversation with your dealer accompanied by a cuppa tea.
Then make your decision.