What’s the Best Car Finance for Me?

Posted 05-12-2019 Information

Red toy car, calculator and pencil

Finding your ideal car at Autostore shouldn’t be a chore, but when it comes to paying for it,  there’s never been more choice - which can make things a bit more of a challenge. There are so many payment options that settling on the best car finance deal can be a bit daunting. Luckily, we’re here to help make your decision a little easier. 

Why are There So Many Car Finance Options?

The reason there is so much choice when it comes to the best car finance options is that everyone’s situation is different. Credit history, employment status, family life and other financial commitments all play a role in deciding which car payment plan might be right for you. Choose the best car finance deal and you could be quids in, saving hundreds of pounds on monthly payments, interest and admin costs.

Before you begin looking for your new car, it’s good to have an idea of how you might be able to fund it - cash, part-exchange, finance or a combination of all of these. Asking yourself a few of these simple questions could point you in the right direction:

- Have I got enough cash to buy the car outright or use as a deposit?

- Am I trading-in or part-exchanging a car?

- What’s my total or monthly budget?

- Is the car for private or business use?

- Approximately how many miles will I drive in a year?

- How often do I want to change my car?

- Would I prefer to own the vehicle outright?

If you are considering car finance, this table might help you to figure out which is better for you:

Car Finance comparison table

What Car Finance Options are Available?

If you don’t have enough cash to buy your dream car outright, you’ll probably be looking at a finance solution, available from one of many different providers. Here’s some of the most popular options:

Hire Purchase (HP) spreads the entire cost of the car over a deposit, followed by fixed monthly payments, allowing you to own the car outright when (and only when) all of the payments are complete. Contracts usually last between 2 and 5 years - the longer the contract, the smaller the monthly payments.

Personal Contract Purchase (PCP) allows you to pay for the depreciation of the car over the time that you drive it. You have the option to own the car outright at the end of the contract by paying a final balloon payment. For this reason, PCP monthly payments are usually lower than HP payments for the same car. No need to worry about trade-in or selling at the end of the contract.

Personal Contract Hire/Leasing (PCH) is similar to long-term car rental. PCH packages include road tax and in some cases, also servicing and maintenance bills. There’s no option to own the car outright, you’ll simply return the car and hand over the keys at the end of the contract. Often short contracts of 18 months or less.

Find out more about these options on our Car Finance page

Smiling family in silver car

How Much Will I Pay With Car Finance?

With any of these car finance packages, the total amount payable by you is the combined value of any deposit you are able to contribute, all of your monthly payments (calculated to include admin fees and interest), set up fees and final balloon payment (if applicable).

Generally, the shorter the length of contract you choose, the higher your monthly installments, but the less you will pay overall, as you will have accrued less interest by borrowing over a shorter period of time.

You can calculate your monthly budget by taking into consideration your income and all of your outgoings. Then, adjust the length of your finance contract to reach a monthly figure that fits your budget. You should only commit yourself to paying as much as you can afford. Don’t forget that you’ll also need to set aside funds for car maintenance and road tax (if you haven’t chosen a PCH/leasing contract), as well as fuel and insurance costs.

You won’t fully own the car until your final HP payment or if you choose to make the balloon payment on a PCP contract. If you default on any of the payments, the car will become the property of the finance company.

PCP or PCH agreements will require you to pay an additional charge if you exceed annual mileage limits or incur any damage to your car (over and above normal wear and tear).

Why Should I Choose HP Car Finance?

If owning your car at the end of your agreement is important to you, Hire Purchase could be the best car finance option. HP car finance is ideal for anyone looking for a straightforward payment plan - pay your deposit followed by a number of fixed monthly payments, after which the car is yours. 

Why Should I Choose PCP Car Finance?

Personal Contract Purchase could be the best car finance deal for anyone who wants lower monthly repayments and/or likes to change cars on a regular basis. An optional deposit, followed by fixed monthly installments will cover the predicted depreciation of the car during your period of ownership. You can hand the car back at the end of the contract without any penalty (provided it is in good condition and you’ve not exceeded the mileage limit), and move onto your next car, or pay a final bigger payment to own the car outright. 

Why Should I Choose PCH Car Finance?

For a hassle-free car finance agreement, PCH is hard to beat for convenience, with maintenance usually included in the fixed monthly cost. However, there’s no option to purchase the car outright and terminating the contract early may result in large penalty costs. If you’re happy to drive the same car for 2 to 4 years and then walk away, this could be the best car finance deal for you. 

Still can’t decide what’s the best car finance for you? Read our Car Finance FAQs to see if they help, or pop into see us at Autostore in our Penrith car showroom or Lancaster car showroom. We can show you all the figures for different car finance options - HP, PCP or PCH - on the same car so you can decide which is the most manageable choice for you.

Financing your perfect car really is within your reach. Visit us at Autostore today to find out how!
 

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