Car finance is complicated. Different financing options are available in the market, but if you choose the wrong option, you can rack up high interest and other charges, thus making your car more expensive than if you have paid in cash. In contrast, the right car financing option can circumvent your expenses and keep your budget on track. 

Here we will let you know the car loans available, and based on that, you may decide which the best car loans and which ones are apt for you.

Hire Purchase

This car financing option allows you to own a car after paying an initial deposit and monthly instalments. It is a loan in which the car is kept as collateral against the loan amount. The loan payment structure is such that you won’t own a car until the full amount is paid. The benefits of this car loan are mentioned hereunder

Flexible loan repayment terms
The cost is spread over several months.
The initial deposit is low
It is counted among cheap car loans because the interest rate is lower than an unsecured loan.

Personal Contract Purchase

It is a kind of car finance similar to a hire purchase. The individuals have to pay a deposit and repay the rest of the amount in instalments. However, the difference between these two types of loans is that the borrower pays towards monthly instalments to cover the vehicle depreciation and then pays towards the cost of the car. It is known as a balloon payment. The balloon payment is the total amount that an individual has to pay at the end of the contract. The payment is based on the guaranteed minimum future value of the car, which the manufacturer sets at the beginning of the contract. This car financing option is available at the best car loan rates and is apt for people with bad credit scores. Here are the benefits of availing of such a loan

Initial payments are low.
The borrower has to make fixed monthly payments which are lower than other car financing options. 
You can give back the vehicle if you do not make a balloon payment.
You will get the best car loan rates.

Personal loan

If you don’t have outright cash to buy a car, you can take a personal loan- provided that you have a good credit score. Unlike other car financing options, you are the legal owner from the start in this.

The benefits of availing of the loan are
You can use the loan as per your need
With a good credit score, you will be able to own a car at cheap interest rates.
You own a car as soon as you purchase it.

Conclusion

When searching for the best car financing options, take your time and find out the company that can offer you a transparent and fair deal, and do weigh all your car financing options carefully.

Adam Barton is the author of this article. To know more about Best Car Loan Rates. Please visit our website: wheeliegoodfinance.co.uk