Summary of a post.
The 5 best ways to finance your new car
The UK’s roads are a congested network. In fact, recent research shows that there are just under 26 million licensed cars in England alone. It underlines the fact that, despite having largely efficient public transport, having a car is still a necessity for most Brits.
It goes without saying that buying a car is a major purchase, and one you want to do correctly. After all, it is a depreciating asset, and the costs of ownership certainly don’t end when you sign on the dotted line. Indeed with running costs, maintenance and insurance, you’ll likely be looking well into the thousands of pounds each year.
So while securing a good deal on the purchase price is important, arguably what’s more vital is to pick something which is most likely to serve you well for years to come, as this will almost certainly save you money in the long term. If this means pushing the boat out a bit further than you originally thought in terms of budget for purchase price, then so be it.
What will help the cause is to finance the purchase in the most cost-effective manner that you can, and to minimise the interest and other charges you incur. Here are five different ways in which you can do that:
1) Cash/savings
If you are in a position to pay for the entire cost of a car with money saved in the bank, then you’re onto prize number one. After all, with rates on savings as derisory as they currently are, there is little to be gained from letting your money sit idle (unless you consider the option of lending such funds through a platform like ours). The only word of caution here would be to ensure that this purchase doesn’t eat into your savings buffer, and thus risk leaving you short when it comes to covering other costs – car related or otherwise.
2) Hire purchase
This is an increasingly popular option for the purchase of new cars whereby you put down a deposit (usually 10 per cent), and then pay it off in instalments over a fixed term. It’s effectively a secured loan against your car, and rates are competitive; albeit usually only for longer-term agreements. The only real downside to this one is that you don’t own the car until you have made the final payment.
3) Personal loans
Personal loans are usually the cheapest option when it comes to car finance, provided you have a sound credit history. Many car buyers make the mistake of paying for a car on their credit card, or automatically assume the finance plan offered by the dealer is the best option. However, a personal loan will almost always offer considerably better value – not to mention that it offers tremendous convenience in that it can be arranged online, with minimal effort on your part.
4) Personal Contract Plan
This mode of finance bears some degree of resemblance to hire purchase. Essentially it involves paying the difference between the original selling price of the car and its resale price at the end of the agreed term (usually 1-3 years) – and doing so in monthly instalments. When the term is complete, you then have a couple of options…
Firstly, you can simply hand the car back to the dealer, shake hands and walk away. You could also pay the resale price and keep the car. Or alternatively, you can even trade the car in and engage in a similar agreement with a new car.
5) Personal lease
The virtues of a lease agreement are clear: You pay a set instalment each month, for a fixed period of time (usually 3 years), and which includes all maintenance and servicing. That means you don’t need to give a second thought to depreciation, and you’ll know exactly how much of your monthly budget to allocate. Yet the downside to this option, of course, is that you will not own the car by the end of the lease term. Added to that, there is usually a significant deposit involved, while you’ll likely be charged extra if you exceed the agreed mileage limit.
Related articles:
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
As with all investments, your capital is at risk.
- Summary of a post.
- Summary of a post.
- Summary of a post.
In line with our risk management framework, today we published our Q4 2019 performance update.
As a platform, we take great pride in all that we've achieved since opening our doors for business nearly six years ago. We’ve
Featured
Wednesday’s Budget speech, coupled with the cut to Bank of England rates, represented a decisive response to the coronavirus. Here we analyse the impact it will have on mitigating disruption from Covid-19, along with the long-term implications of this significant fiscal stimulus.
Rumblings from the Treasury ahead of next week's Budget suggest tax grabs will be needed to fund increased spending, and it appears UK enterprise could be in the firing line. Here we articulate why targeting entrepreneurs and small business is ill advised.
In a difficult climate, customer acquisition and lead generation present stern challenges for UK retailers, and a great deal of marketing spend invariably gets directed towards getting feet through the door.
There is a variety of literature and research illustrating the importance of building brand loyalty, albeit with some degree of variance.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The idea of peer-to-peer (P2P) lending is a simple one; you lend money to those who wish to borrow, with a view to receiving a great return for doing so.
Most popular
The 2019-20 ISA season has been a damp squib, with banks disinterested in attracting savers’ cash, rates cut, and the stock market in freefall. However, the emergence of the IFISA means alternatives beckon for those seeking a stable middle ground in terms of risk and reward.
In a decade of slow recovery, the rapid rise in asset prices has been the standout. But how sustainable has price growth been, and could we be in the midst of a bubble?
- Summary of a post.
Most people consider income tax to be a given, but in the UK it is barely two centuries old. In this article, we look at how this tax has developed over the years, and also why it is set to remain at the core of our tax system for many decades to come.
Open banking celebrated its second birthday last month, but has the ‘revolution for financial services’ that was promised actually come to pass? In this article, we look at the progress the initiative has made so far, and what the future holds in the face of high levels of scepticism.
On the face of it, a 'broken' energy market needed fixing, and the price caps introduced in early 2019 were heralded as the solution. But, one year later, have they actually helped consumers save?
Recent
The Lending Works Shield does not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The Lending Works Trustee has absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Lending Works Shield when considering whether or how much to invest. For more information click here.