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Buying a new car is always a big step as it is typically one of the biggest outlays a household has to make. Your new car finance options often depend on where you are getting the vehicle from. For example you may be buying from a private seller through an advert you have seen on a specialist motoring website or in a paper, or you may be thinking of getting one from a dealership.
If you do decide to buy from a dealership you may have more choice when it comes to setting up a loan. For example, the dealership may often offer a hire purchase option. Typically this involves paying them back money they have loaned you to buy the car over a set period. The main attraction of this is that you spread the cost of the repayments, and potentially reduce the hit on your bank balance.
On the other hand, hire purchase often involves an interest rate which means that you may pay more for the car than if you bought it outright. Typically you may expect repayment periods to differ and you may even be given the option of repaying over two or three years or four or five. The longer periods typically involve a higher rate of interest, but smaller monthly repayments.
Getting a deposit together may be an especially important point to consider. With some dealerships, if you are able to gather as much as 40 per cent of the purchase price, for example, they may be able to offer you a zero per cent interest deal.
However, another thing to bear in mind with hire purchase is the fact that until you make the final payment the dealership effectively still owns the car, and typically reserves the right to repossess it if you fall behind with the repayments.
Arranging new car finance is just one part of shopping for a car. Other things you may want to consider include asking dealers about whether or not a warranty is in place on the vehicle and how long it may last for after you drive it away. Even brand new vehicles may break down from time to time, and if there is a warranty in place you typically have the right to return it to the garage if it breaks down within a certain time frame after you buy it.
Another common method of arranging new car finance is to take out a private loan, which you may want to consider arranging before you start shopping around. You may want to try a specialist motoring website to compare interest rates and repayment periods before deciding on the deal which is right for you.