It’s definitely exciting to buy an entirely new vehicle, but since you can expect to pay a hefty amount for your car, it pays to be careful and practical with your purchase. Financing your car can take on different forms, and you have more than a few choices when it comes to paying for your vehicle. You can take the cash route, for example, and pay for your vehicle outright. But if you don’t have the funds, you can go for alternatives such as paying with your credit card, doing a PCP or personal hire purchase, and more. But for many of us, it’s a bit difficult to decide when there is a lot at stake – namely your finances for the future. To help you decide, here’s a look at your top payment options when purchasing a new car: which is best?
1.Buying and paying outright
Experts will agree – the best way to pay for your new vehicle would be to buy it outright. But before you do it, you need to consider other factors. It comes with some absolute benefits, however, so if you have the necessary funds for it and will still have savings left over, your best option is to buy and pay outright. For one, paying outright means that you are not in debt to anyone, and you will be the owner of the car as soon as you pay for it. It also means that you don’t have to deal with interest (which can be hefty), and you can avoid any charges to your credit card. When you go for an outright purchase, you can benefit from a plethora of new car deals and discounts that you won’t get with other payment options, and you certainly don’t have to worry about expensive monthly repayments. It’s all settled from the get-go, but you also have to make sure you have enough savings left, and you have to compute your expenses to make sure you can cope well financially.
2.Going for a PCP
PCP or personal contract purchase agreements are now increasingly popular, and it’s where you settle a deposit on the vehicle then pay a set amount of payments per month, which usually spans from two to as much as four years. When the agreement ends, you can return the vehicle, settle a final sum to buy it and make it yours, or do an exchange on the vehicle for another one. PCP plans often have lower monthly fees compared to HP or hire purchase agreements and personal loans. But you don’t own the vehicle until you pay the final lump sum. With PCP, you have to consider your mileage – you can be charged if you go over the limit.
3.Opting for hire purchase
With hire purchase agreements, you have to settle a deposit and then pay for the vehicle over a fixed time, which usually lasts from two to up to five years. You are not the owner until you settle the final payment, and it can be a good option if you don’t have much cash outright and would like to spread the vehicle’s cost over a few years. The payments per month will usually be larger than a PCP agreement, however, and you may have a higher interest rate if you don’t pay much for the deposit.
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