Personal Loans
Although loans have become harder to get hold of because of the economic challenges of recent years they are still a popular choice when looking to finance your next car.
There are two different types of loan you can opt for - secured or unsecured.
A secured loan requires some form of asset (usually your house) that will be used as security by the lender to recover its cash if you fail to pay them back. An unsecured loan doesn’t need this, instead the lender judges from your credit rating if it can trust you to repay the money.
Car Finance
There are two main types of funding when it comes to car finance, usually arranged through the dealership; hire purchase (HP) and contract hire purchase (CHP).
The main difference between the two is that one you pay a lump sum at the end (CHP) and the other you don’t (HP).
Both require a deposit initially and then regular monthly payment until the end of the agreed term.
At the end of the term, if you opt for hire purchase, the car will become yours. If you have a CHP plan you need to pay the outstanding balance to take ownership of the car or trade the car in using the leftover value as deposit on a new model.