If you’ve been looking at upgrading your car, no doubt you will have come across multiple finances options and ways that try to make your purchase that little bit easier. However, if you’re not familiar with all the finance terms, it can just seem like a lot of nonsense and make the process even more stressful. Here is our jargon-busting guide to car finance.
APR - Annual Percentage Rate
The APR, or annual percentage rate, shows how much your loan will really cost you. When looking at deals, always take note of the APR as well as the monthly rate, so you know exactly what you’re paying out in the long run. Something else to bear in mind is that the rate advertised isn’t necessarily what you will receive, as this can vary due to personal finances, additional fees, and other things.
Sometimes referred to as personal contract hire, leasing is often a lower cost option but it is the motor equivalent of renting a house; at the end of the agreement you will have to hand the keys back. The most important thing to remember when taking out a lease deal is that a mileage limit will be agreed at the start and fees will need to be paid if this limit is exceeded.
The most common and often the easiest form of car finance is hire purchase. This allows you to put down a deposit and pay monthly instalments over a set period of time. At the end of the deal, you will then be given the option to become the legal owner of the vehicle by paying a fee.
Similar to hire purchase, personal contract purchase (PCP) allows you to pay a deposit and agreed monthly instalments. You are then offered three options at the end of your agreement: return the car (as long as it is in good condition), keep it (by making a final payment that covers the guaranteed future value), or trade it in for a newer model.
Great deals on car finance in the West Midlands
To discuss using finance options to purchase your new car, get in touch with the Motor Market team online or by calling 01296 632634.