How to finance a new set of wheels
The start of the new year is set to trigger a surge in car sales, according to new figures which show two fifths (*) of drivers are going to buy - or are
considering buying - a new or used set of wheels in 2010.
While new car sales have recently seen a boost - driven in part by the Government's "cash for bangers" scrappage scheme which offers a Â£2,000
discount on a new car - the majority of motorists are still looking to go down the second-hand route.
But irrespective of whether you go for new or used, it's crucial to get a good finance deal to avoid being taken for a ride.
Make use of cash savings
If you've got significant savings squirreled away, you may be in the enviable position of having enough money to buy the car outright.
But if a cash purchase isn't possible, you could consider a dealer offering interest-free credit; to qualify, you'll need a good credit record, a substantial
deposit and to be able to make large monthly repayments.
Think before signing up to showroom finance
If interest-free credit isn't possible, don't sign up for the first loan deal you are offered by the car dealer, or you could end up paying over the odds.
There are different types of package available: with hire purchase (HP), you put down a smaller deposit than for interest-free finance, and then make
monthly payments of capital and interest over, say, three or five years - then the car is yours.
With personal contract purchase (PCP) the initial costs are lower, but when the payments end, you must hand back the car - or the lump sum.
Interest rates on showroom finance are typically higher than on personal loans, but the finance is much easier to get.
They key is to arm yourself with information about what sort of packages and rates are available from other lenders before you go into the dealership.
Pick up a personal loan
Personal loans offer flexibility to car buyers, and the best way to get a good deal is by shopping around.
Despite the fact that many lenders have hiked up the rates on their