Car loans � take your pick

You may be one of those fortunate folk who know precisely want they want when it comes to replacing your car. Or maybe you're the type who treks from garage to garage trying to find perfection. After a while all these cars merge into one and you can't remember which extra was standard with which car. Your wife and children threaten to leave home and the cat and dog are less than impressed too. Maybe at this stage you turn your only friend, the computer, for inspiration and surf the net for bargains. They're certainly there to be had, and as with most things nowadays, it's an easy way to go, with lots of help and advice available at the click of a mouse.

If the latter category is the one that describes you best you have our deepest sympathy.

When it comes to financing your choice of car, be it new or second hand, the means to finance it can be just as bewildering, but making the right choice can save you a great deal of money.

Interest free finance is worth considering. This is normally offered through dealers and tends to be restricted to new car buyers. If the car of your choice is covered by one of these deals then this will probably make your decision a lot easier. Often these deals ask for a fairly substantial deposit. Not all models are offered at nil or preferential rates and the one you want may in fact be at a higher interest rate than normal. It's all a matter of swings and roundabouts. If you're a "haggler" then it's unlikely you'll get both a discount and a good finance deal. The better option may be to get the very best discount you can on the car and then arrange your own hire purchase or personal loan.

Dealers will be happier if you opt for hire purchase. It's easy to arrange and offered on both new and used vehicles. As far as the dealer is concerned, they will earn a very nice commission from the finance company. Sometimes you'll be able to get an improved deal when they take this commission into account, which is why the question of how you'll be paying for the car crops up when you're seated in the chair, offered a coffee and the serious talking starts. Ownership of the car is not yours until the final payment, so you'll need a settlement figure if you decide to part exchange it for your next car.

You may decide to take a personal loan. This effectively makes you a cash purchaser. Remember that the dealer will prefer you to take the hire purchase route and make sure you do your sums, it's the final sum paid that matters at the end of the day.

Personal Contract Purchase is a fast growing area of car finance. An agreed deposit is made; usually equal to about three months repayments. You then pay on a monthly basis for an agreed period, often two or three years. At the end of this period you have a choice of returning the car or making a final payment and keeping it. You will be aware at the beginning of the agreement just what this figure will be and this is guaranteed provided you haven't exceeded the annual mileage allowance. Again this is per the agreement but usually estimated at around 12,000 miles per year.

Obviously with this arrangement the monthly payment will be lower than it would be with hire purchase, but the car is only yours after the final lump sum is paid. Many people stick with the same make of car and use this type of finance, returning the car and replacing it with their choice of a new model at the end of the term.

A simple lease deal may suit you even better. This is arranged through a leasing company. You negotiate the price for the car from whichever source you choose, and then agree the period of the lease, normally two to three years. Make a payment equal to three months of the agreed monthly repayment, set up your monthly payment source and at the end of the time you simply return the car and that's it. No hassle, no used car to sell. Choose, lease, pay and hand back.

So, the choice is yours. Careful comparison will pay dividends, make those comparisons and make your money work for you.

Enjoy your choice!

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