What is the best way to buy a car?

💸 Buying a car with cash. 

In many life situations, cash is king, and when it comes to car buying, it’s true! When you buy a car outright with cash, it means you’ll be the owner of the car straightaway, you can modify and sell the car as you wish, and there’s no interest or monthly payments to pay. Buying a car with cash can be the most cost-effective way to get a car. You’re not limited to where you can buy the car from, and you can use private sellers or local dealers. Buying with cash can make it easier to haggle for a used car as sellers may be looking for a quick cash sale.

The main drawback of buying a car with cash is emptying your savings to make the purchase. Cars have become more expensive in recent years and you may need to save up thousands of pounds just to get a second-hand car. The cheapest brand-new car in the UK is the Dacia Sandero which starts from around £14k which means new car buying may be hard with a cash payment.

💸 Getting a car on finance. 

For many drivers, car finance is the no-brainer, go-to option for buying a car. Car finance allows you to choose whether you pay a deposit and then spread the cost of the car into affordable monthly payments over an agreed term. Usually, car finance deals are spread over 3-5 years but you can choose the term to suit your monthly budget.

NOTE: It’s hard to guarantee car finance to everyone who applies and you’ll need to pass car finance eligibility criteria before a lender would off you a deal.

There are two main types of car finance which we specialise in, find out more about Hire Purchase (HP) and Personal Contract Purchase (PCP) below:

Hire Purchase car finance.

Hire Purchase finance is our bread and butter! The majority of our lending panel offers HP deals to those who are suitable. It’s one of the easiest forms of finance to get your head around. Most HP deals come with 0 deposit to pay upfront but some lenders may require some form of payment at the start. Once you’ve found a car you like and can afford, a finance lender buys the car from the dealership on your behalf. You can then pick the car up from the dealer and use it over the term. The cost of your car and any other fees and interest are split into equal monthly payments over your agreed term. Once all payments have been made, there’s a small payment to make and then the car is yours to own. 

Find out more about how Hire Purchase works.

Personal Contract Purchase (PCP).

Hire Personal Contract Purchase is more complicated than HP, but it is probably the most popular way to buy a car on finance. PCP deals offer low monthly payments and can make brand-new cars accessible to drivers. You can get PCP for both brand-new cars and used cars too. PCP cars can offer low monthly payments because you don’t spread the whole cost of the loan into your monthly payments. Instead, you pay off part of the loan over the duration and there is a large balloon payment at the end of the deal. If you want to keep the car, you’ll have to pay the final payment upfront or refinance the balloon payment. If you don’t want to keep the car, you can also choose to hand the car back to the dealer or use the vaue towards a new car on PCP.  

Find out more about PCP car deals.

Find out how to increase your chances of getting car finance.

💸 Taking out a Personal Loan.

Many people class personal loans as a form of car finance, and whilst they can be used to buy a car, they are more of a general loan type. A personal loan is when you request a specific amount of money from a lender, and if approved, they deposit it into your bank account. This means you can buy a car as if you were a cash buyer and then pay back the lender. Unlike HP and PCP, the lender doesn’t buy the car, and it’s not secured, which means you’ll be the legal owner of the car from the start. You make agreed monthly payments back to the lender until your term ends. If you sell the car before the loan term is up, you’ll still need to keep paying or use the money from the sale to settle the finance. 

💸 Using a credit card.

Buying a car on a credit card is one of the lesser-known ways to buy a car. If you’re lucky enough to find a credit card with a high limit and a long 0% interest rate, it can be cost-effective. Paying off your car within the interest-free period can see you get a car like a cash buyer and have no interest to pay! Not all dealers will accept credit cards as a form of payment so it can be worth checking this out first. If you don’t pay off the car during the interest-free term, it could end up being more expensive than other finance options.