Adult life can be difficult and trying to finance a car is one of the many difficult tasks we need to face. Cars can be expensive, and on top of that, you need to come up with money for fuel and insurances. Let’s take a look at some of the ways you can finance the right car for your needs.
One of the best ways to get your hands on the car you need is to buy second-hand. This is easily one of the most affordable ways of financing your car and, depending on where you go, you could get the car of your dreams for a lot less than it is actually worth.
One of the standard ways to finance a car is through hire purchase. This very similar to having a mortgage except it is obviously for a car instead of a property. You will have a down payment and then a schedule of payments to make after that until the car is completely paid off. This remaining balance will also accrue interest, with more interest needing to be paid for the longer you have to make payments.
Hire purchase is an excellent option available for anyone buying a car, whether it is new or used. It is an easy way to break down the cost to a small amount each month and it is therefore great for working into a budget.
Personal Contract Purchase (or PCP) is a slight variation of the hire purchase model. In this, the worth of the vehicle at the end of the payment period is calculated at the beginning using factors like the car’s age and projected mileage. This is known as the Guaranteed Minimum Future Value, of the GMFV.
After the payment period, you have several options. You can pay the GMFV to buy the car outright, you can hand the vehicle back to the dealer, or you can trade in for a new car. This system is fantastic for anyone who likes the hire purchase scheme but would like something a little more flexible.
Financing a car is always going to be a big commitment whether it is a used car or a new one. If you cannot afford to buy outright, you are going to have some sort of repayment scheme to contend with but there are many options out there to help you work one into your budget. With a little forward-thinking and some careful planning, it won’t be long before you have the car of your dreams.