Why Financing a Car is Better Than Buying Upfront

May 14, 2018
Source: topDreamer

When the time comes to purchase an automobile, it can be an exciting but also daunting time. This is because there are so many options to consider not only in terms of make and model, but also how you go about purchasing the vehicle. Purchasing upfront, whether it is new or used, is often not a great choice because the price can have a huge impact on your finances. It is for this reason why a car finance deal is the best option more often than not.

Finance

A car finance deal involves making fixed monthly payments over an agreed period. Depending on the type of deal, you will then own the automobile once the final payment has been made. This main advantage of a car finance deal is that it spreads the cost of the vehicle and makes it easy to manage your expenditure each month. This is particularly valuable for parents who need to carefully budget and avoid any large expenditures.

Types of Deal

Hire purchase is a traditional car finance deal that involves paying a deposit (usually around 10%) and then making fixed payments until the final payment has been made. By this point, you are the owner of the vehicle and can do with it as you please. With HP, the vehicle itself acts as the security so there is no risk to your home. Another popular option is personal contract purchase (PCP). This is similar to an HP deal but you have a few options at the end; you could make a balloon payment and purchase the car, hand it back with nothing more to pay if it is not worth the final payment value or part exchange and settle the agreement. Excess over and above the final payment can be used for the next deposit.

Loans vs Dealer Finance

Obtaining a loan from a bank or building society is another option, but many motorists find it best to opt for dealer finance from somewhere like Imperial Car Supermarkets. This is because dealerships like this often have access to finance products which are not available elsewhere, which could help you to afford a better car. Additionally, you can also tailor the deal to your particular wants or requirements and you will benefit from a fixed interest rate – this means that you know exactly how much you need to pay each month and this can make budgeting simple and straightforward.

Getting a Better Car

For many motorists, if they have to pay upfront for a vehicle then they may have to choose something cheap that may not meet their demands. A finance deal, meanwhile, allows you to purchase a better car and this is particularly important for parents who may require a specific car to meet the tough demands of family motoring.

Car finance deals are a great way to obtain a vehicle as it will not have an enormous hit on your finances (unlike buying upfront) as you can spread the cost and know exactly what you are paying each month and for how long. On top of this, these deals can also be quick, easy and flexible when you go to the right place too.