225,910 cars for sale - 23 October 2014


Car loans & finance

Looking for the best car loan deal? Why not search and compare the main car finance companies from one place. Our car loans section lists the top 5 leading car finance companies on the web (provided by Yahoo!).




Car finance options


Moneysupermarket.com - Like most people buying a brand new or second hand car, you probably don't have the money available to pay for it in one go, so you will likely want to know what your car finance options are. Moneysupermarket.com has analysed what options you have when it comes to financing the purchase.

Personal loan

Personal loans are one method that are definately worth looking into as it offers you increased flexibility in terms of the type of loan you could take out.

If you are buying a car worth £15,535, a likely scenario would see the dealer ask for a £3,500 deposit and charge 11.9% over three years, which will end up costing you £17,742.56.

However, if you are to take out a personal loan from Alliance & Leicester at 8.8%, there is no upfront deposit and you would end up paying £17,645 over three years, which is a saving of almost £100. You could also pay a £3,500 deposit to Alliance & Leicester and get a lower rate of 7.9% on your repayments for your loan of £12,035. This would result in an even lower payment.

Another option would be to pay back the loan over a longer period to make each monthly repayment more affordable. This would increase the total amount you pay but may be the difference between you being able to afford the monthly repayments or not.

Hire purchase agreement

With a hire purchase agreement you will have to pay an initial deposit and then pay the rest of the money in monthly installments. The bigger the deposit you pay, the smaller your monthly repayments will be. You can also reduce your monthly repayments by paying a lump sum at the end of the contract.

However, hire purchase agreements also have drawbacks. You will never own the car until the whole amount is paid back, which means that unlike with a personal loan, the lender can claim ownership of the car and take it from you if you fail to keep up with the repayments. You also won't be able to sell the car until the whole sum is repaid, as you technically won't be the owner of the vehicle.

One thing to look out for is whether the seller is offering you a 0% deal, as you could possibly get the car for less elsewhere.

Lease a car

For those people that don't mind if they don't get to own the car, car leasing is a great option as you get access to a new model and can change it for an even newer one every so often. This will mean no deposit and monthly repayments will be far lower than with a personal loan or hire purchase agreement. You also won't need to worry about paying for your car to have a servicing either, as that will be included in the deal. However, this won't be for everyone. Your money will effectively be going into a bottomless pit, with nothing to sell at the end and you could face restrictions on the number of miles you're allowed to do, limiting your freedom. You could also be forced to pay for any damage done to your car which doesn't class as wear and tear. Another thing to consider with this is that you will have to have fully comprehensive insurance, as the car will not be your own.

Conclusion

The decision about what is best really depends on your circumstances. Everyone is in a different financial situation and has different requirements and each option has pros and cons. However, if you really want that dream car but don't think you can afford it, don't be disheartened as the above options could make it possible.