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Guest blog – Your car finance options when buying a new car


Image by JayeshJansari via Flickr

The most important thing to consider when getting a new car is how you’re actually going to finance it, says Nadim Saad, director of car finance comparison site,

In these times of austerity, we are seeing fewer people able to afford a vehicle by paying for it upfront. Recent figures from the Finance and Leasing Association (FLA) reinforce this view, with car finance usage growing 42% year on year for January 2012.

Luckily, there are a number of car finance options that can help.

Different types of car finance options

When we’re looking to buy new car, we often focus on the small details, such as the colour or whether or not it has leather seats.

What often gets overlooked is the really important question – how are we going to pay for our new motor?

According to the FLA, most people use some sort of car finance arrangement to get their vehicle on the road. And while many people are familiar with the concept of car finance in the form of hire purchase, there have been exciting developments in this area in recent years.

PCP – personal contract purchase

Personal contract purchase (PCP) is a form of car finance which enables you to pay lower monthly payments while having the option to own your own car. It works by paying monthly instalments for the car over a set period, usually around three or four years. When that period is over, you have the option of making one final lump sum payment for the car to be yours, or simply handing the car back and avoiding the hassle of selling it privately.

The advantage of PCP is that it allows you to avoid taking one large hit to your bank account, while at the same time gaining access to attractive rates that a bank loan or hire purchase agreement can’t match.

Car leasing

Another alternative is car leasing, which works on a similar principle to PCP, but you never own the car – instead, you pay a monthly amount to use the car. It’s almost like renting a hire car while on holiday, only for a much longer period.

While it might sound a bit strange at first, car leasing brings with it numerous advantages such as avoiding depreciation, which can wipe out over 50% of a car’s value over the first two years of its life. It also means that you don’t have to worry about selling the car on when the time comes to part ways with it – you can simply hand back the keys and upgrade to a new model.

Car leasing can also give you access to premium models at a lower rate – one reason why it’s become such a popular form of car finance in recent years.

So, when looking to buy a new car, enjoy making those fun decisions that help make your motor more personal to you. More importantly, make the right decision when it comes to financing your vehicle that suits both your needs and your pocket.

To find out more about which car finance option may be best for you and to get monthly prices on all new car models, visit