Buying a new car is a major financial decision and one that you need to get right. This is often the biggest purchase that people make behind buying a house and for most people this will require using some kind of finance for the purchase. There are a few options to consider here, so read on to find out what these are and how you can make the right decision.
Savings
If you are able to, using your savings to buy the car outright can work well and will end up being the most affordable as you will not have to worry about interest. Obviously, this is a huge amount to pay upfront, so you may need to start saving well in advance in order to afford the purchase. If this is not an option for you (it won’t be for many), then there are a few other options to consider…
Personal Lease
These days, many people are opting to lease instead of buy and this is certainly worth considering. Leasing is beneficial because you can simply return the car at the end of the agreement and take out a lease on a newer and better car, plus you can also avoid depreciation. Cars are constantly losing value, which means that you will take a big financial hit if you buy and decide to sell a few years later.
Personal Loan
Another option is to take out a personal loan to cover the cost of the vehicle and this is often most affordable behind paying a lump sum. This allows you to spread the cost of the car over one year or longer, which can make the cost much easier to manage. Typically, you will need to have a good credit rating to get approved for a loan and you need to shop around to compare the APR.
Secured Loan
Another loan option to consider will be a secured loan from somewhere like Evolution Money Limited. Secured loans are best for those that do not have a great credit score as the loan is secured against your home, which makes it less of a risk for creditors so you can often get affordable rates too. Of course, this does come with risk and you need to make sure that you are able to afford the repayments. If you are struggling to keep up, you should always let the lender know as quickly as possible as there may be some flexibility.
These are a few of the main ways to finance the purchase of a new car. Ultimately, it will come down to your personal preference and financial situation but you should always take your time to work out what is the best option for you.
