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Car Finance : How Easy Is It To Come By?

There is no doubt that getting finance is getting harder by the day. After the recession hit homes, lending facilities have tightened up their lending criteria, which pushed a lot of people out of the market. Remember, there are lots of different types of car finance, so for those that are looking for a new car but do not have the cash, there could be hope.

Personal Loans

When it comes to different types of car finance, personal loans are certainly the obvious choice. When it comes to flexibility, personal loans are certainly the top choice. Interest rates tend to be extremely low and it gives the buyer the chance to buy and sell cars as they choose. They are able to get a great deal on new or used cars, where as a lot of car dealerships will only offer finance options on their newer deals. The problem is that out of all the different types of car finance, this is possibly the hardest to obtain.

Hire Purchase Deals

Many people that have looked at the different types of car finance might not have looked at hire purchase. Hire purchase has been around many years and in terms of flexibility, it offers it in limited supply. What hire purchase allows people to do is to put a small deposit of around 10-15% down on the vehicle that they want. They essentially hire the vehicle for a period of time with fixed monthly repayments and at the end of the period, they can either choose to buy the car, or to give the car back and take on another deal. This offers flexibility which not all the different types of car finance offer.

Contract Purchase

Contract purchase is much like hire purchase and is the most similar of all the different types of car finance. Like hire purchase deals, consumers will need to put an initial deposit down on their vehicle and then commit to the monthly repayments. The difference here is that the consumer is actually agreeing that they will buy the vehicle at the end of the repayment period, rather than having the option to give it back.

Contract Hire

Contract hire is a contract to hire a vehicle and is one of the different types of car finance, although it does not actually involved purchasing the vehicle at the end of the agreed period. There are some issues with this type of finance, including the fact that most of the contracts are 3 years, which is a long period of time to simply be hiring a car. Alongside this, they usually have a limit on mileage. If the driver actually drives more miles than the limit, then they are going to have to pay extra, on top of their agreed monthly repayment. In terms of the different types of car finance currently available, this is the only one that does not end with an option to purchase a vehicle, which is what a lot of people actually want in the long term.

Guest Post by Tom Wood

Posted under Best Car Loans