Different Ways Of Financing Your Dream Car

When buying a car there are two ways to acquire it: (i) you can pay the full cost

straight away using cash; or, (ii) you can use car finance and pay a monthly amount to drive the car. If you use car finance there are three typical products you could choose - a car leasing contract, a hire purchase contract or a loan (which might be secured or unsecured). You can compare and obtain car finance through specialist websites.

Car leasing allows you to lease a car for a fixed period of time whereby you pay a fixed sum every month until your contract comes to an end. It works in the same way as a car rental agency but for a longer duration and, depending on the leasing product, at the end of your lease period you have the choice to buy the actual car (i.e. personal contract purchase) or return it to the dealership and get a new one (personal contract hire). Leasing is often a cheaper alternative to buying and is a good option if you've found a car that is slightly above your monthly payment threshold for a loan for that car. However, you should always shop around and compare like with like based on mileage, period and toal amount payable.

Although car leasing is a great way to finance a car that would normally be too expensive for you, if you choose personal contract purchase and you decide you want to buy the car at the end of the lease contract by paying the balloon payment, make sure that the balloon payment is not above market rate for the same car at that time. It really does depend on your preferences and your current financial situation if it is more worthwhile for you to finance your car using a loan or use leasing. Be sure to calculate the final cost of both options before entering in to a finance contract because once you sign there's no going back!

With leasing you should be careful to consider everything. For example, as mentioned above, when leasing a car there will be a mileage limit in the contract and at the end of the contract there may be additional charges related to the wear and tear of the car, although you can avoid all of this if you treat the car as if it is your own.

If none of these options are available to you due to a poor credit history, or you don't qualify because you don't have a job to be able to finance your car each month, then there are alternatives to secure a 'near new' car for less than the cost of a new car. If you have a stable income flowing into your account every month but cannot afford a one off cash purchase then car leasing may just be the thing for you - just make sure you research all of your options correctly and if you are comparing prices, make sure that you are comparing like with like (e.g. same period, same upfront amount, same mileage).

by: Lawrence White

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