What are my options for paying for a car?

By Glossy Magazine

What are my options for paying for a car?

What are my options for paying for a car?

What are my options for paying for a car?

On the hunt for a new car? Whether it’s your first after passing your test or you’re an experienced driver wanting an upgrade, there’s a lot to consider during the process.

One of the biggest considerations to make is how you’ll pay for your car. The modern vehicle marketplace offers several payment methods to suit different circumstances. This ensures more people can afford to get a car, which may be necessary for commutes to work, school drop-offs or family road trips.

Your options when paying for a car include buying outright or one of the finance methods. You may be wondering which one is best for you and our guide below should be able to help. Continue reading to find out more about these payment methods as well as their pros and cons.

The UK car market

Before deciding on a payment type, you’ll first need to navigate the UK’s car market. This includes picking a model, finding one with the right features and getting it new or used.

You can typically pick used cars up from reliable dealerships in Leeds, Manchester, London, and the rest of the UK at a better price, which is why so many people buy them. Before buying, it’s essential that you check the used car thoroughly to make sure there are no issues.

How can I pay for a car?

Buy outright

Buying outright is the most straightforward method when buying a car. You’ll simply agree on a sale price and pay it in full. Roughly 60% of drivers pay using this method, making it the most popular.

Pros of buying outright

No interest or finance charges

Simple purchasing process

More negotiating power

No monthly payments looming over your head

Cons of buying outright

Significant upfront cost

You may miss out on other investment opportunities

It won’t help you build your credit score

Finance the vehicle

Financing a vehicle means paying for a car in monthly instalments rather than all at once. The main type of finance available is personal contract payment (PCP) where you pay a deposit and monthly payments over an agreed period. At the end of your contract, you can pay the final balloon payment, hand in the car and walk away or trade in the vehicle to start a new PCP agreement.

Pros of financing

Preserve the money in your bank account

Affordable repayments

Can help you build your credit score

Access to better makes and models

Flexible terms available

Warranty benefits

Cons of financing

Interest will make the car more expensive

Long-term financial commitment

Missed payments cause credit ratings to drop

Less flexibility to switch vehicle

Deprecation may mean you’re paying more than the car is worth