Tips on buying a new car

Having an unreliable vehicle can be a real hassle, causing distress, taking up time, and even posing a danger to the driver and others on the road.

Whilst we would all love to be able to pop out and buy another more reliable car without a second thought, most of us do not have the ready cash to do this, and therefore have to look at some form of finance.

The good news is that there are a number of options available to those looking to buy a newer car, with solutions to suit most needs and circumstances, so you don’t necessarily have to be stuck with an unreliable vehicle.

It is important that you look at the different options open to you before you make a decision, as the different forms of finances will suit different needs and circumstances.

Remember, some people, such as those with poor credit, may be more limited in their options, and the cost of purchasing a vehicle may therefore prove more expensive. Below are some questions relating to buying a car through finance:

How can I find out about the different forms of finance that are available to me?

The best place to do your research in to car finance is online, as you can learn more about the different options open to you without any pressure.

Car sales come under a very hard sell environment, and if you visit dealerships or ring to ask questions you could find yourself being railroaded into taking an option that may not be the best one for you.

Take the time to learn about the different options and weigh up the pros and cons before you make a decision.

Can I just get a loan from the bank for my car?

Yes, you will find a number of options when you go to the bank. You can opt for a personal loan that can be used for any purpose, and then use this to purchase your vehicle.

This will give you the freedom to look around and get your vehicle from any showroom or even via a private sale if you are buying a used car.

On the other hand, some banks offer specialist car loans, and you can enjoy some additional perks such as free HPI checks, reduced breakdown cover, discounts on insurance cover, and more. See what your bank has to offer in terms of car loans before you make a decision.

Do bear in mind, however, that you will normally need to good credit rating in order to get finance from the bank.

Is dealership finance very expensive?

Dealership finance can be very expensive, but it does depend on the deal and also on your credit. You may find that some dealerships are offering special deals now and again, and it is worth looking at these, but always compare the cost with other options that are open to you.

If you take dealership finance then you will find that you are restricted to a vehicle from that particular dealership, so you will not have as much choice as you would with a standard or bank car loan.

What is HP?

HP is known to be one of the most straightforward and simple ways to finance your car purchase. Basically, you pay a set amount each month for your car over a specified period. After you have paid off your car the vehicle belongs to you. However, you may find that interest rates are high with HP.

What is PCP?

PCP stands for Personal Contract Plan, and this has become an increasingly popular solution for many younger people that cannot afford to buy a new car outright but do want to enjoy the benefits of a new, reliable vehicle. With this method of purchase you select the car that you want from your chosen dealership and then sit down and work out the repayment plan.

A large chunk of the value of the car is deferred until the end of the contract term, and this is known as the balloon payment. Having this chunk deferred means that you only have to finance a portion of the car’s value, which keeps your monthly payments down.

The term is usually three years. At the end of the three year period you have three options. You can return the car without paying the balloon payment and pay nothing more for it. You can pay the balloon payment and the car becomes yours.

Or you can return the car and select another new car, and whereby your plan will start afresh on your new car.

Can I get finance if I have poor credit?

If you have bad credit then you may find it difficult to get many forms of finance. Bank loans will probably be inaccessible to you, and some dealership finance will also be out of the question. However, there are specialist dealerships that cater for those with bad credit, and they provide you with the finance to buy a car from one of their showrooms.

On the upside this means that you get the finance you need for a newer vehicle. On the downside, you have to choose a vehicle from that dealership, and you will most likely get charged a small fortune in interest due to your credit status.