Advice for car finance

Financing a new car can be a difficult choice. Many people simply choose to buy a used car, which might seem cheaper on the face of things, but the range of financial products are limited and the cost of MOTs, repairs, maintenance and even fuel and insurance can be much higher with a used car than they are with a brand new machine.

Some of the lucky ones might be able to finance a new car using their savings or cash. For most of us, though, that’s just not possible. A far safer option (because of the credit card purchase protection) is to buy the car on a credit card, even if you pay it off in full the next month. The purchase protection is what makes it such a good idea, giving you full peace of mind. If you need to spread the cost further, one option is a personal loan. This is usually not tied to the car itself or secured against property, giving you additional personal security. There are some very low APRs available at the moment, thanks to the low Bank of England base rate, so have a shop around.

For those who prefer simplicity and dealing directly with their local car dealer, direct car finance has become far more competitive in recent years with a number of new options available which motorists might not be aware of. Alfa Romeo, for example, are offering a £500 deposit contribution with their finance packages, meaning that buying a new Alfa Romeo Giulietta, 4C or any of the sports cars in the Alfa range is actually cheaper when you take out the finance arrangement, as Alfa are offering 0% finance plus the £500 they’ll give you towards the deposit. Now that sounds like a pretty good deal to us.

Personal contract plans are also becoming more and more popular, giving the motorist the option to either hand back the car at the end of the finance arrangement after paying a much lower monthly payment, trade the car in as a part-exchange and start again, or pay the resale price of the vehicle and keep it to do as you please. The deposits tend to be lower, as do the monthly payments, and the flexibility of three different options is an attractive prospect for many motorists.

You should always make sure you can afford the monthly payments associated with whichever option you choose, as well as making sure you’re getting the best APR rate available and know the total cost of your arrangement over the full period. You’ll also need to consider payment protection insurance, GAP cover and all of the other options available to you when you finance a new car purchase. As long as you know all of the terms and conditions and understand the costs involved, the flexibility in financing a car in the modern day can allow you to have the car of your dreams without any of the pressure and stress.