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Best way to fund your next car

In the market for a new car? Not sure which is the best way to fund your next car? Read this handy guide on the best way to fund your next car! In the past, cash was king, and you had to save up for the car you want. These days there are many finance options available for different financial situations. It can also depend on whether you want a new or used car too. Generally, there’s a common misconception that finance deals such as PCP can only be obtained on new cars, however, nowadays there are many used car finance deals available! Let’s, take a look at the different finance options available. 

Cash or savings

Buying a car with cash or your savings fund has many benefits. If you’re looking for a used car that will be your first car or a little run-around then it shouldn’t take you too long to save up for your first car! When you buy a car with cash you are automatically the legal owner of the car and you aren’t tied into any agreements. This means you can do as you please with the car. There will be no mileage charges or restrictions and you can sell the car whenever you like! You can purchase a car with cash from a private seller or from a dealership. If you’re buying from a private seller it may be riskier as you aren’t protected if the car is faulty. You should do your own checks and there are a few things you should consider before buying a used car such as check for any faults, damage, and take a test drive. If you’re using your savings to buy a car with cash, you should also leave a little money over for other expenses. There’s no point in buying a car which you can’t afford to run. First-time buyers will need to factor in costs such as car insurance, road tax, fuel costs, breakdown cover, and any other unexpected repair charges. 

Credit card

Buying a car with a credit card is an option however you should always check that the dealership accepts credit cards as a form of payment for a car as some dealerships in the UK don’t. Alternatively, you could put down a deposit for a car finance deal on a car using a credit card. The process is the same as buying anything else on a credit card as you will charge the full amount to your card and then make repayments to the credit card company. Similarly, to cash, the purchase isn’t held against the car and you have bought it outright, so you have more freedom for what you do with the car. You should also keep in mind what type of credit card you use, if possible, you should try to apply for a 0% credit card and pay off the balance before the offer ends. If not, the APR rate is usually 10-15% which could make funding your next car more expensive than you thought. 

Personal Loan

If you want to spread the cost of owning your next car into affordable monthly payments, then any sort of finance can be a great option for you. A personal loan or a bank loan is often offered by banks or building societies and can be one of the cheapest finance options. You usually need a good credit score to obtain a personal loan however, if you are struggling there are many bad credit specialists who can help you obtain car finance with bad credit. You should shop around for the best rate and compare the APR offered on different loans, if possible you should stick to soft search credit checks only as multiple hard searches can negatively affect your credit score. When you’ve found the loan that’s best for you with an affordable repayment plan, you will have the amount deposited into your bank account to buy a car. You then make monthly payments to your agreed term. Once the final payment has been made the agreement is over. You can buy the car outright with your loan so you will be the legal owner of the car from the start of the agreement. 

Hire Purchase

Hire Purchase is one of the most straightforward forms of car finance. You can apply for hire purchase car finance through a dealership or a car finance broker. They will usually need to perform a credit check on your credit file before you get accepted. They will then offer you a maximum loan amount which you can use to buy a car. Once the loan is agreed you will make monthly repayments till the end of your car finance term, usually between 2-4 years. Your payments will have added interest which can be determined by your credit score. The loan is also secured against the car so if you fail to meet the repayment schedule the lending company has the right to take the car away from you. Once the final payment has been made, you will then become the legal owner of the car, and the finance agreement has ended. Hire purchase spreads the cost of the car with the intention of owning the car at the end of the deal so monthly repayments can be a little higher than other options. 

Personal Contract Purchase

Personal Contract Purchase is similar to Hire Purchase. You can also choose to put down a deposit at the start of your agreement but there are many no deposit car finance options available within PCP agreements. You then make monthly repayments with added interest to the end of your agreed term. However at the end of a PCP agreement, you have 3 options to choose from, you can either hand the car back to the dealer and walk away, pay the final balloon and keep the car or you can use the value of the car on a new PCP deal and get a new car!


The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of SpeedwayMedia.com.

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