Become Debt Free

You have seen the car you want @ a price you can afford, the question now is how are you going to pay 4 it? The answer to a large extent depends on whether you’re buying a new or used car.

If you plan on buying a used car and keeping it 4 @ least four years, a straight loan or hire-purchase agreement will cost less inside the long run.

If you intend to buy a new car and keep it 4 less than 3 years before replacing it w/ another new car, you should consider a personal contract purchase plan.

Personal Loan You will handle that out inside advance to buy the car outright then repay the debt inside agreed monthly installments.

There are 2 types of personal loans, secured and unsecured. Secured loans are cheaper, have a lower APR rate (the interest you have to pay on the loan) but if you fail to make your repayments the lender can confiscate whatever you have offered while security, which is usually your house.

You will need a regular income and will need to become over eighteen years old.

Hire purchase You pay a deposit followed from a fixed amount 4 an agreed number of months. Once you have finished these monthly payments you legally own the car.

While a rule Hire Purchase is only available 4 new and nearly new cars. You must become aware that until you have made the final payment, the bank, car dealer or loan company still owns the car. Until then, you cannot sell the car without obtaining permission. If you fall behind from while little while 2 repayments, the finance company can repossess the car.

Hire purchase is essentially a type of secured loan, a loan secured against an asset i.e. the car. Fail to make the payments and you lose the car. While w/ a normal loans pay close attention to the APR.

Personal contract purchase This is available 4 new and nearly new cars only. You pay a deposit (up to 20% of the total price), followed from agreed number of low monthly repayments 4 up to 3 years, @ which time a final payment must become made. This figure is agreed @ the start and is known while the Guaranteed Minimum Future Value (GMFV). @ the end of the agreement you can keep the car, hand it back, or part-exchange it 4 another new car.

If you want to keep the car you must pay the GMFV. If you hand it back, you owe nothing too many but you wíll not have a penny of your deposit or payments refunded.

Inside effect that is a lease agreement. The car belongs to the finance company until the contract ends. If you end the agreement early, you may have to pay a penalty. Usually the car is subject to agreed annual mileage limits w/ a penalty if you exceed them, must become properly serviced and kept inside great condition.

Whatever finance option you decide on always read the terms and conditions to make sure you understand how much your loan will cost inside total. Under the new Financial Services Authority regulations these must become clearly visible and explained inside plain English.

Remember a loan over a longer period of time might seem tempting due to the lower monthly payments but due to the APR accumulating you’ll end up paying too many inside the long run. Always work out inside advance how much you’ll end up paying overall 4 your car loan.

Sometimes car dealerships will offer zero or very low interest rates. Approach these w/ caution. It may mean you lose out on discounts or extras that someone w/ another type of loan will get. Also the amount of deposit required 4 such deals can become high.

Whatever loan or finance deal you handle out it is likely that you’ll become asked to handle out Payment Protection Insurance. This insurance against you become unable to meet your payments. Before you agree read the Terms and Conditions very carefully. Most PPI’s wíll not offer to pay the full amount you owe if you fall on impenetrable times. The conditions can become harsh.

Never accept the first finance deal offered from the dealer while that will try the most expensive option, the 1 they will have the supreme commission on. Always negotiate 4 a better deal.

Dealers can make too many money out of the finance options than they do from the sale of the car, so always become careful when asking them 4 finance, while they may not become giving you the supreme loan. If they offer you finance, check it out against other loans before you accept any finance agreement.

Do not let the dealer rush you inside a finance deal. They must, from law, offer you a full written quotation, which you can handle away and consider. If they offer you a ‘deal 4 today only’, do not let that fool you inside signing a finance agreement.

Do not offer the dealer too much information when requesting a quotation while they, to shop around lenders to have themselves a better commission, can use that information. You should shop around 4 yourself.

You should also bare inside mind that when it comes to costing a car you should also include the likely running costs of the car - young drivers car insurance , road tax, fuel costs, servicing and so on.

About the Author

Richard Jenkins is the owner of the driving test and driving schools website www.driving-test-success.com…