If you are buying a new car, chances are you are buying it from a dealer. If you are unable to pay cash (which applies to most of us), the dealer will offer you finance. What type of finance he offers will depend on how you answer a couple of questions.

“What are the maximum monthly payments you can make?”

“What is the maximum deposit you can put down?”

Naturally, most of us will say as low as possible to both! But, being realistic, if you have a reasonable deposit (either in cash or by part exchanging your previous car) and want to keep your monthly payments low, he may recommend hire purchase. If you have little or no deposit but can manage slightly higher monthlypayments, he may recommend a Personal Contract Purchase (PCP).

Dealers often have relationships with particular finance companies which give them, the dealer, a commission on the loan you take out - so they are going to be influenced by that. It’s very important you make several comparisons from other lenders before making your final decisions.

Remember, if you can raise finance other than with the dealer, this effectively makes you a cash buyer - you are then in a very strong position when it comes to haggling the price!

Click the link below which most applies to your circumstances or whichever type of loan you think you may be interested in.

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