Paying For A Car: The Options
Options now range from being cash buyer to joining a car club
When buying a car, there are many things you have to think about. How practical is the car? Can I fit the weekly shop in the boot? How much does it cost to fill up with fuel? But most importantly how much does it cost and how am I going to pay for it? There are now more options available than ever.
Cash can be king when it comes to buying car, putting you in a position to demand the best deal.
The benefits of being an outright cash buyer include owning the car from day one, meaning the only things you have to pay for are the repairs, MOT, insurance and running costs.
If you want a more expensive car, or simply don’t have enough money spare, then a bank or persona loan is another option. It’s best to look around to find the best deal as some banks offer much more flexible options than others. Also make sure that you obtain the lowest possible rate of interest. The APR – or Annual Percentage Rate - is the one to compare if you are trying to establish the best deal, the lower the better. With a personal loan, you own the car from day one, but the bank could have a claim on property secured against the loan it if you fail to keep up repayments.
If you buy something using hire purchase, you are effectively hiring it until you’ve made your final payment. Citizens Advice has good advice when it comes to understanding your rights following a hire purchase agreement.
PCP (personal contract purchase or personal contract plan)
Most car dealerships now offer this way of getting a car. In its simplest terms, you pay a relatively small amount each month for the car, usually for around three years. At the end of the three years, the owner can either hand over the remaining amount required to pay for the vehicle; hand the car back with no further money to pay; or simply get another car, either on PCP, or by buying it outright.
There are a few drawbacks with this way of financing a car as you will never own the car unless you pay the outstanding balance at the end of the contract.
There are also stipulations about how many miles per year you can travel in the car. Additional miles over and above an agreed limit are charged at around 40p per mile.
But by financing a car this way you will get a new car every couple of years which won’t need an MOT.
Business and personal lease hire plans are now available, which provide hassle free car use for a set fee. People taking out a lease usually pay an up-front deposit and also agree a monthly fee and maximum mileage. Servicing and repair bills can be part of the lease agreements. At the end of the agreed period, the car is simply handed back.
If you don’t want to buy a car and don’t need one that often, hiring one is an option. Although in the long run it works out a lot more expensive than buying one, if you just need one every now and again you can hire one from around £12 per day.
The popularity of car clubs is on the rise and it’s little wonder. For a membership fee of around £15 per month, you can get a car when you want for as long as you want with hourly rates starting at £4.95 and daily rates starting at £39.95. Again this is the perfect way to have a car without actually owning it and having to deal with all the extras that come with it.