How To Finance Your Car Purchase

When looking for a car loan to finance your new vehicle, just like car insurance, it pays to shop around. 

Where To Borrow Money

There are a number of ways of borrowing money to purchase a car. Firstly, the garage that is selling you the car will probably offer you finance to complete the purchase.

Secondly your Bank or Building Society will normally be able to lend you the money. However, the decision as to whether they will need any security from you to cover any non repayment of the loan will be down to your own personal circumstances.  

Thirdly, there are a number of Finance companies that specialise in car finance that can help you.
 
Personal Contract Purchase  

An increasingly popular way of purchasing a car is through a PCP (Personal Contract Purchase) agreement. Under a PCP a proportion of the repayment of the loan is deferred until the end of the loan agreement. One advantage of this arrangement is that it reduces the monthly payments. Then, at the end of the loan agreement, you can normally choose to buy the car at an agreed price, hand the car back to the dealer or part exchange it for a new car.

Whilst this type of borrowing can be attractive because the monthly repayments are lower you may find that it works out more expensive because the rate of interest charged is higher? Also, you may find that the car loan is secured on the actual car itself which means that in the case of non repayment the garage could be able to take the car from you.