For most of us, getting a new vehicle is an exciting endeavour – it is, after all, our chance to choose something that we can use for several years and make the most of as well. We all have our preferences, whether you’re eyeing that latest SUV model or a cool saloon or practical hatchback. But here’s another aspect you should be thinking about when planning to purchase a new vehicle: how can you choose the best way to pay for it? You have a few options, from an outright purchase deal to a loan. So what’s the best option for your needs? Here’s the best way to get your new car: your top questions answered.
- Outright purchase
If you have a particular amount of savings, experts will tell you that paying for a vehicle outright is your best option. There are a few advantages to this as you don't have to deal with debt, you own the vehicle right away, you will not have to contend with interest, and you can do away with expensive vehicle repayments each month.
But before deciding that outright purchase is for you, make sure that you can use your savings expressly for your vehicle, and that they aren’t earmarked for other things. Also, would you still have enough money in the bank if you buy a car outright? It's good to make sure you still have the funds you need in case there is an emergency. The thing with paying in cash is that it is the cheapest and most viable option as long as you have enough money and savings for it. Additionally, if you pay for your vehicle outright, you can take advantage of discounts and new car deals that won’t readily be available to those who are not paying in cash.
- PCP or personal contract purchase
Another option would be to pay for your new vehicle with a PCP, also known as a personal contract purchase. This means that you pay a deposit for the vehicle along with a fixed amount per month for repayments. PCP deals or agreements can last from two to four years, and at the end of the agreement, you have a few options: you can give the vehicle back, settle a final sum so you can buy the car outright, or exchange the vehicle for a new vehicle by using equity. Typical PCP contracts often offer lower payments per month compared to hire purchase contracts or personal loans, but you will not actually be the owner of the vehicle until you settle the final sum. You also have to think seriously about your mileage because if it is too low, you may have to settle an additional charge, and if it's too high, your monthly repayments could increase.
- A personal loan
Your third option is a personal loan, and it comes with some advantages, such as making it easier for you to effectively plan and budget your finances, and you can choose the term of the loan. But with this, you also have to have a good credit rating or paying for your loan will be quite expensive.