In the world of finance, everything is about money. And since we need money to pay for all of our utilities, necessities, and luxuries, reflecting on how we pay and what are the proportions of our costs and income, really tells a lot about what type of people we are. And when it comes to a new car, everybody is looking for a way to finance it. 93% of the new cars are paid in monthly installments. While there are some schemes you can implement, all of them work in a certain way. Car financing is crucial if you are opting for a new car and don’t want to pay all of your savings in a single installment. Which type of finance you go to depends on a few things. Here, we’ll talk about everything you need to know on how to finance your new car.
Consider Lowest Monthly Payments
Whether you are paying off the car with a loan or your savings, consider if you can have the lowest possible monthly payments. This way, you will have more money in your monthly budget to spend on other relevant stuff and make ends meet. For higher monthly rates in exchange to own the car, you can hire a Hire Purchase instead of PCP. However, lower monthly payments mean you will be paying off the balance slower. Lastly, if you do monthly installments with low costs and no chances of owning the car, you can consider PCH leasing. Hire Purchase and PCP are classed as finance, so you can return the car early with no charges added in certain cases. And if you need to return the lease, you will need to negotiate the terms with the leasing company and still be liable for the future installments.
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Determine the Best Deals
Before deciding on the type of financing, you need to check several deals and see if they work for you. To determine the deals you need to inform yourself about the possibilities, of both PCP and Hire Purchase offers since they can affect your monthly deposit and mileage allowance. The longer, lower, or larger these are, the less your monthly payments will be. Be careful when you sign a contract because some terms in the contract can be hidden. Like the manufacturer deals with low payments per month that are enabled by the long contract, tiny mileage allowance, or giant deposits. Let’s learn more about all of these shortcuts like PCP and PCH.
What is PCP?
PCP or commonly known as Personal Contract Purchase is one of the most popular types of financing your car. It offers low monthly installments compared with the car’s value and it’s one of the best ways to pay for your car at the end of the contract, or you will be presented with an option to return the car to the finance company. This type of payment consists of a deposit, while in particular cases you don’t have to do any deposit and a series of monthly payments. When the contract ends, you can make one decision, to buy the car or give it back to the company and do not pay anything. And this will be valid only if you’ve stuck to the contract of pre-agreed mileage limit and no damage beyond the tear and fair wear. If you go over the mileage and you decide to return the car, you might be handed a mile fee. And the same rule applies if you’ve done any damage to the car. You might be charged for any significant dents, interior stains, tears or scratches. In case you decide to purchase the car and make the final payment, none of this will apply to you.
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What is PCH?
PCH or known as Personal Contract Hire is also car leasing. It’s a long-term car hire where you can make up-front payments known as the initial rental and then pay monthly rentals. At the end of the contract, you will give the car back to the company and there is no option to buy it. One advantage with PCH is that the lease payments will be lower than the PCP. Thus, if it’s important to you to own the car, you can choose PCP or Hire Purchase as an option to finance your car. The lease contract will include damage charges and mileage limits since you will need to hand back the car to the company. In this case, you are not borrowing money, you are renting a product, and that product is the car. If you are leasing a new model of a car, make sure you have all of the Internet stuff and wireless tools so you can check the network status and outage in case you use the GPS and get lost somewhere.
Also Read: 4 Easy Ways to Pay off the Loans for Unemployed
