If you're interested in buying a new car, you want to fund the purchase in the most convenient way, without paying more than necessary. A range of options are available to help you get behind the wheel; we discuss each in turn to help you decide on the best one for you.
Borrowing from family
This is the cheapest option and could be the best, as long as you know someone who is willing to lend you the money. Just make sure that you will be able to pay the person back in an agreed length of time, as you don't want to risk falling out over money problems.
Savings
As interest rates are still very low on ISAs and savings accounts, you might want to take out your own money to pay for your new car purchase. This can be a good choice rather than a loan or finance as the cost of one of those methods is likely to be more than any interest you would have received on savings in the same time.
Credit card
You could consider paying by credit card if you can get one with a good period of interest-free credit on new purchases (and the limit is enough to cover the purchase of course). When the term ends, you can either clear the debt or switch the amount to another card. The Consumer Credit act will also give you some protection if buying this way.
Personal loan
An unsecured personal loan has the benefit of not having to be secured against anything as collateral, so it's less risky than some other methods. However it's important to seek out the best provider and consider how much you want to borrow and for how long, so that you can afford the repayments without stretching your finances.
Hire purchase
This payment method involves paying a deposit of around 10% usually, then repaying the rest of the balance, including interest, over an agreed period. Bear in mind that you won't own the car until the end of the payment period, and if you miss a payment the finance company can reclaim the car.
Personal contract purchase
Often shortened to PCP, Personal Contract Purchases can be suitable for those who like to change their car every few years. After paying a deposit of about 10% you have fairly low monthly payments over an agreed period and then a lump sump left at the end. At that point you can either pay off the remaining sum and own the car, hand the car back, or sell the car privately to get the funds to pay off the balance. Note that you will need to look after the car well and not exceed an agreed mileage.
There is no one best payment option for everyone; the one you choose will depend on your personal circumstances and requirements. Let us know your preference on Facebook or Twitter.