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There are a number of different ways you can fund the purchase of a car. The following are the most common: -
Hire purchase (HP)
With a hire purchase agreement you do not legally own the car until you have made the final payment. Therefore, if you default on the repayments, the car can be repossessed. An HP plan can be arranged via your car dealer or organised by you direct with an HP company. Either way the HP company will send the money direct to the car dealer. HP can be organised for both new and used cars.
Manufacturers' schemes
Car manufactures always offer a range of financial packages to help you buy a new car. Usually, they will also offer finance packages for you to buy a used car from one of their main dealers.
As a large proportion of new cars are bought on credit, manufacturers often use special finance offers as a way of promoting their cars. 0% interest and payment holidays at the commencement of the agreement are common. Look out for them in your local and national papers. You will also find details on the web sites operated by the manufacturers' main dealers. But be aware that if you use one of their finance packages, you may find it more difficult to negotiate a discount off the actual price of the car.
Personal Loans
Many people simply raise a personal loan to pay for a car. As car loans are rarely spread over more than 3 or at the most 5 years, they are usually structured as unsecured loans. In these circumstances, you own the car outright but of course you have the liability to repay the loan according to the agreed payment schedule.
Personal loans normally enjoy lower rates of interest than HP or the standard manufacturer schemes and armed with the money from a personal loan, you are free to shop around for a good discount on your car.
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