3 Types of Payment Options for Used Vehicles

Are you considering buying a used car? If so, have you considered how you’ll pay for it?

Whether you have an idea of how you want to fund your new vehicle, or you still need to do some research, it’s worth exploring all of your options before you make your purchase.

To help you select the right method for you, here’s an overview of the main payment options to choose from.

Paying with Cash

If you have the funds and you’ve calculated that you can afford to pay in cash, this can work out as the least expensive way to buy your vehicle. This is largely because, unlike hire purchase or similar payment methods where you’ve entered into a contract and hire the car, once you’ve handed over the money, the car is yours.

As well as giving you the opportunity to own your car outright, paying cash also gives you the opportunity to set your budget and stick to it. You have a clear idea of the cars you can afford and can do your research with this price in mind before you head to any dealerships.

Paying with a Personal Loan

Another way to cover the cost of your car is buy taking out a personal loan. This allows you to space out payments across anything from one year to seven, depending on how much you take out and the type of loan you choose.

While the repayments each month can work out higher than other methods, as with paying cash, your car belongs to you from the beginning of your loan. As you have to pay interest, you’ll be paying more for your car overall, but this still works out as a cheaper alternative to some other options.

Paying on Finance

Like taking out a loan, buying your used car on finance requires monthly payments. Usually, you will take your finance out with the finance company that your chosen car dealership works with and you are effectively hiring out your car.

What happens when you have paid off the car will depend on the type of finance you have selected. If you opt for hire purchase, you will usually pay a deposit and pay off the value of the car over a set amount of monthly instalments. Once you’ve made all the payments, the car is then yours.

Personal contract hire, or PCH, is ideal if you don’t want to buy the car outright at the end of the agreement. This is basically a long-term rental agreement that means you pay fixed monthly payments and return the car once the contract comes to an end.

If you choose to take out a personal contract purchase, you will follow a similar route to hire purchase, however I this instance, you’re paying off the depreciation of the car, rather than covering the cost of its value. At the end of the contract, you then pay a final lump sum in order to keep the car.

If you’re considering paying via finance, it’s worth taking some time to source a dealership that offers deals that suit your budget. Car supermarkets, such as Imperial Cars, are the ideal choice as they have teams that can provide key information and answer your questions.

How will you pay for your used car? Have you decided what type of car you’d like to drive next?

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