How to pay for your next car – five top options

If you’re looking to buy a new or used car but you don’t have the cash at the ready, there are a number of different ways you can pay.

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Here are your options…

1. Personal loan

If your credit rating is up to scratch, you can get a personal loan to pay for your car.

It’s also best to compare the loans available from a number of lenders, rather than just your bank or the car dealer to make sure you get the best interest rate.

Our loans comparison tool find the best rates AND tells you your likelihood of being accepted for each one.

2. Hire purchase (HP)

Hire purchase is a loan usually offered by the dealership and one that is secured against your car.

Annual interest rates (APR) are often higher than personal loans and you may not find out how much interest you’ll pay until you’ve applied – so approach these with caution.

3. Personal Contract Purchase (PCP)

Here you pay a deposit to the dealer and then a series of monthly payments  for around two or three years.

The advantage is that once the payments end you can choose to hand the car back, make a one-off payment to buy it outright, or trade it in and start a new deal.

A word of warning, though – you won’t actually own the car until you pay the final fee, and the value of these deals can be affected badly if the car depreciates while you drive it.

4. Personal Contract Hire (PCH)

With this arrangement, you  lease the car for an agreed period of time and make fixed monthly payments.

When the contract is up, you simply return your car or take out a new contract on a new vehicle.

5. Credit card

If your credit score is up to scratch, you may even be able to buy your car using a 0% purchase credit card, which means you’ll pay no interest for a set period of time.

If you do use a 0% credit card, set your monthly repayments to clear the debt in this time or you’ll start paying interest at a much higher rate than a standard loan.

Our tools can help you find a cheap deal, which is matched to your credit rating so you know the odds of being accepted too.
As you can see, there’s more than one way to pay for your next car – now you need to decide what makes the best financial sense for you.

 

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