There are pros and cons to buying cars on either finance or paying up outright. Which option would suit you best?
Feature body: When it comes to buying a new car, one of the methods that is getting most popular is acquiring one on a finance basis. Yet this means waiting a little longer before your car truly is yours and some prefer the old fashioned means of buying a new vehicle outright.
If you find that it is time to buy a car then it is worth weighing up which option will suit you best based on the money you have available or can acquire and the deal that appeals to you most.
What can you afford?
It's no secret that buying a car is a very costly basis and getting one outright can mean putting a huge dent in your savings. On the other hand, once you have made that payment the car is yours and you need not think about it again.
With car finance, you will have to shell out so many hundreds of pounds on a monthly basis until the period where you need to continue paying ends. On the other hand, it is easier to get the money together for car finance at short notice, which means that you can potentially afford to get a better vehicle as and when you need it. That is, as long as you know you will be able to afford to keep paying for it.
Before deciding on what to do, you need to consider the amount of money you have available to you. If you have a lot of savings in your bank then you should be able to take the hit of paying for the car that you want outright.
However, if you know you will be needing those savings at a later date for something else then you may wish to use your current account spend to cover your monthly payments.
It is also worth considering how this will affect other finances. For example, if you are looking to take out a mortgage, personal loan, or to get a credit card then having monthly outgoings on a car could have an adverse affect on the amount of money that you can borrow.
What kind of car are you looking to get?
Practical spending aside, the type of car you are getting and how long you are intending to use it for are also important things to consider. Plus it's a lot more fun thinking about the new vehicle you will be buying than anything else.
For example, are you looking to get a big executive car that you are planning to do a lot of miles in and you need it for work fairly sharpish? Or are you in need of a small city car that you will simply use to get from A to B as and when you need it? Are you aiming for something stylish and luxurious or are you satisfied with something simple and aren't to bothered about the newness of it?
These are important things to consider when deciding how much you are willing to spend on your vehicle and how you plan to do this.
Of course, if you need an executive car that will last and you need it there and then, you should be prepared to spend a lot more. However, buying a model that has had good reviews from a well-trusted brand could see you saving money in other areas, such as repairs, fuel and car tax.
Therefore, if you need to buy this car on finance then the amount that you pay on interest could be made back on these other areas.
For a small city car, however, such as a Vauxhall Corsa or a Ford Fiesta, these are not designed to last as long as a number of other models but they have a cheaper price tag on them from the outset. As a result, these cars are far easier to buy from the start. Additionally, if you decide you want to change car soon after then you can quickly sell it on without having to worry about continuing to pay off your finance deal.
- On: 02 June 2014
- By: CarShop
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