Buying a new or second hand is always an expensive business and unless you are one of the dying breed of motorists lucky enough to be a cash buyer, then how you finance your new purchase is going to be a major consideration.
So, what are your options?
Basically, you can look at the dealer's own finance schemes ('schemes' in most cases, being the key word here!); by taking out a car loan from a loan provider or bank; or, by remortgaging.
Car dealer finance
With car dealership finance, there are many different types available. However, in most cases, they work out the most costly way to fund a new motor. This is because car dealers are in the middle men between you and the finance company who are offering the loan and while the 'money' is changing hands, the car dealer likes to take his own little cut.
This will be reflected in the interest rate you are offered by the dealership, which will in most cases be bumped up from what the finance company are asking.
And if you see a 0% finance deal, while it will seem attractive to everyone, even those who could be cash buyer, you need to ask yourself why they are offering such a good deal. Is it because they need to shift this particular make and model of car as it isn't selling?
If this could be the case, what hope will you have of selling a few years down the line when you decide to get another vehicle?
Or is the 0% finance deal on offer because there are hidden extras that will be added in to the overall costs so that the dealership stills makes a nice little profit, which mans you are paying over the odds for the car?
Also remember that should you miss your monthly credit repayments on the car, it could be repossessed, leaving you literally stranded.
Do your research thoroughly before signing up to a 0% finance deal - everything in life comes with a price tag even if it is hard to see.
Personal loans
By arranging a personal loan even before you set foot inside a showroom, you put yourself in a much better position as you will have a lot more bargaining power. Plus, it means that once you sign on the dotted line for your new car, you own it completely, even if you do have a debt to pay it.
Finding the cheapest personal loan in order to finance a car can be simple. It's all a case of shopping around for the right deal. Of course the internet makes this easy for you, giving you access to literally hundreds of providers and deals. You can compare interest rates as well as terms and conditions and can even apply online.
Always get a fixed rate loan for a shorter time as possible in order to know exactly how much you are paying out each month and to minimise the amount of interest you will repay.
Remortgaging
Finally, remortgaging is another way to finance a new car. However, do bear in mind that while you may be paying a low rate of interest (mortgage rates in general are lower than personal loan rates), the payment will be spread over a longer period of time - up to 25 years depending on the term on your mortgage.
So, you'll be paying lots and lots of interest back on it.
You should also ensure that the extra repayment is affordable. Should this extra repayment be a burden on you finally and you start to miss repayment, it will be your home, not your car, that will be repossessed.
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