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Car Finance For Young and New Drivers - A Guide

Several finance options exist that allow you to finance the purchase of a car.

Personal Loan

Taken out from a bank or car dealership. Such loans are unsecured so you don't have to be a homeowner to get one. However you will need a regular income and must be 18 or over. As soon as you make the payment the car is legally yours. The lower the APR (interest paid on the loan) the less money you will eventual have to pay.

Hire Purchase (HP)

With Hire Purchase you pay off the entire price of the car through a series of monthly payments. The car only becomes your legal property at the end of the contract, when all monthly payments have been made. As a rule you will have to pay a deposit up front. The higher the deposit the less the monthly payments will be.

Hire purchase is essentially a type of secured loan, a loan secured against an asset i.e. the car. Fail to make the payments and you lose the car. As with a normal loan you should pay close attention to the APR.

Car Lease

Involves making monthly payments, under which you are in effect hiring the car for a fixed period. At the end of the term, you have the option:

Most car leasing deals involve a maximum mileage i.e. 30,000 miles over three years. If after the leasing period you have exceeded the mileage you will incur an additional cost per mile. Leasing deals can sometimes include maintenance and breakdown cover in the monthly lease payment.

Before Your Start Searching For A Car To Buy

When Taking Car Finance From A Car Dealer Beware

Author Richard Jenkins

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