How to Fund Your Used Car Purchase

There is nothing more exciting than buying a car and driving it off the forecourt; you are buying a world of possibilities where you can go anywhere and do anything. It can work out more cost-effective to buy a used rather than a brand-new car as they tend to hold their value more. However, you will still need to consider how to fund your pre-owned car purchase.  Here are the top four ways to pay. 

Savings

You may choose to use your savings to fund your car purchase. However, this does depend on you having enough money in your savings account and not having these savings earmarked to fund something else. The great thing about using your savings is that you won’t pay any interest and the car will belong to you straight away. If you already own a car, you might consider part-exchanging your existing car. This means that it could be more cost-effective than you think.

Loan

You could apply to a lender for an unsecured loan to buy the car. This will mean that you have to make a monthly repayment, but the loan is independent of the car. This means that it is harder for the lender to repossess the car if you don’t keep up the repayments. Taking out an unsecured loan will also make it easier to sell the car whenever you want as you don’t have to wait for the finance deal to end. 

Hire Purchase

A hire purchase agreement means that you take out a loan against the car and make equal monthly payments. This can be an easier type of finance agreement to get than an unsecured loan, especially if you have a low credit rating as the car is security for your repayments. This means that if you don’t keep up the repayments, your car can be repossessed. At the end of the term, the loan has been repaid in full, as long as you keep up the repayments, and the car is yours.

PCP

A PCP agreement is an increasingly popular way to fund a car purchase. This is a type of hire purchase agreement but instead of paying for the car in equal instalments, you can choose how much money to put down on the car initially and then select much you want to pay per month. There are usually different monthly payments available. At the end of the agreement term, you can give the car back, trade it in for a new one, or pay the balance to buy the car outright. Many car dealers offer them. For example, if you are looking for car finance Cheshire you can approach a dealership such as The Car Centre which can offer you a great deal on a PCP agreement.

These four purchase options are the most common methods of paying for a car. As this is one of the most expensive purchases you are likely to make, it is best to consider what option suits you best before you proceed with your purchase.