Walking everywhere takes too long, cycling’s out of the question when there’s shopping and children to consider and public transport is both inconvenient and unreliable, as well as potentially terrifying when travelling alone at night.
It’s clearly decision time. Time to rethink your personal travel arrangements. In a nutshell, it’s time to get yourself a new car. It’s the only way to travel… unless you can afford a helicopter or a private jet that is!
And here you are, wandering around a car showroom looking for your practical runabout, when suddenly you spot a gleaming Toyota RAV that ticks all the boxes on your dream car shortlist.
Your heart starts to beat a little faster. You can picture yourself at Goodwood, en route to the stables; free to do what you like and go where you please, in all weathers, whenever…
But wait a second, how are you going to pay for this car? How do other people pay?
Well you’ve at least three options to consider…
Personal loan
A car loan is the most popular form of car finance. Whatcar.com tell us that 33 per cent of all car deals go down this way. The pros are pretty obvious, you get instant ownership of the vehicle as long as you keep up the payments. You’ve got to check out the APR on each loan and work out the amount you have to pay back each month. The longer the payback period, the less amount that has to be paid, but the larger the amount of interest. Also, an unsecured personal loan will mean that any of your assets can be taken if you default on your payments. So make sure you check out the details and get the best deal possible.
Hire Purchase
If you don’t go down the car loan route, then, chances are, you’ll get your car on hire purchase. So how does this work? You pay a deposit, around 10 per cent, followed by fixed monthly payments. The major drawback here is that the car is not actually owned by you, it’s owned by the hire purchase company until you’ve made your final payment, then it’s yours. Also the credit on a hire purchase agreement is secured against the car, so that only the car will be taken if you default on your loan.
Car Dealer Finance
If a car loan and hire purchase is not for you then you can always go down the car dealer finance route. But be sure to consider this option with your eyes wide open. Do some research and don’t just look at what the monthly repayments are or even the APR; take a look at what the overall payment will be for the entirety of the deal. And remember, the great thing about dealer finance is that you can negotiate with them. So feel free to haggle that interest rate down. Just like hire purchase the only thing at risk here is the car, if you default.
Finally, if none of these three options appeals to you, then there is another way of paying for a car: self-finance. Although if you could afford to make a purchase this big without the requirement for some short-term credit you probably wouldn’t be reading this!
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This is a guest blog from NatWest.