What is the best way to buy your next car?

Getting your next car or shopping for your first car can be a really exciting time. But for many it can be quite daunting, especially if you’re not sure how to fund your next car. There are a lot of questions to consider before getting a car. One of the main factors which can determine which type of car you get and how you pay for it is your budget. Not only do you need to focus on the cost of the vehicle, but factor in things like insurance, fuel, and EV road tax too. This is why choosing the right payment method matters. Let’s take a look at the different ways you can fund your next car and how to decide which is right for you.


Many people say when it comes to cars, cash is king. Buying a car with cash can be the most cost-effective way of owning your next vehicle. When you buy a car with cash, you will be the legal owner of the car so you can sell it when you are ready and make any modifications you like. You also don’t owe anyone any money and don’t have to pay more money in terms of interest. However, cars can be expensive to buy outright, and you may not want to spend your full savings on purchasing a car. Buying solely with cash may also limit your choice of car, depending on how much you have saved.

Credit card

If you don’t have the cash to hand to pay for your next car, you may consider paying for a car on a credit card. Buying a car on a credit card works the same way as buying anything on a credit card. You pay for the car in full on a credit card and then pay it off monthly with added interest. Some credit card companies tend to offer 0% interest rates for a set amount of months and as long as you pay your car back in this time frame, you won’t have any interest to pay! If anything goes wrong with the vehicle, you are also protected under the Consumer credit act if the car is not up to standard, or the dealer fails to supply the vehicle. You should note that some dealers won’t let you pay for a car on a credit card so it’s best to check first before you commit to getting one.

Hire Purchase

Hire purchase car finance is one of the simplest forms of car financing. You would apply for a hire purchase loan and if accepted, pay a deposit then spread the cost of your chosen vehicle into monthly payments with added interest. The interest rate is set by the finance lender based on your personal circumstances. Low interest rate car finance is usually offered to those with good credit scores but people with bad credit can also be considered for hire purchase. Hire purchase agreements are usually spread over 1-5 years and the lender owns the car throughout the agreement. Once the final payment has been made, the ownership of the car then transfers to the customer. There is no mileage limitation associated with hire purchase, but the lender has the right to take the car away from you if you fail to meet your finance payments.

Personal Contract Purchase

PCP car finance deals are a form of hire purchase but instead of paying off the full cost of the car, your payments only cover the cost of depreciation at the end of the agreement. Because of this, monthly payments tend to be lower than other options and can be more suited to those who like to change their car more frequently. At the end of the agreement, you have three options, you can pay the balloon payment and keep the car, hand the car back to the dealer or use the resale value of the car on a new car. In most cases, customers tend to hand the car back to the dealer so its key that the car is kept in good condition. You will set a mileage limit at the start of the agreement, and you could face additional mileage or damage charges if you exceed the rules of your agreement.

Personal Loan

Personal loans are a type of finance that isn’t secured against the vehicle you choose. This is because personal loans can be used to buy anything you want. Some people even take out personal loans that will cover the cost of their vehicle and first year’s insurance. You would apply for the amount you want and if accepted, it is deposit into your bank account and then you can get the car you want! You can get a car from a dealer or private seller, and you own the car from the start. You then make monthly payments with interest till the end of your agreed term. If you decide to sell the car before the agreement is up, you will still have to continue to make the repayments.


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