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Lease, Finance or Cash: Best Way to Buy in 2016

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With so many different ways to buy a car, it can be really hard to find which option is best for you. There is a certain degree of horses for courses when it comes to your most preferable method and what suits one person may not fit another. To give you an idea of the pros and cons of the different ways to buy a car in 2016, here’s our helpful roundup.

Buying a Car with Cash

 If you have the money on hand, then buying a car with cash is the best way to get a good price. You won’t have to worry about monthly repayments, interest going up or any of the limitations that come with leasing a vehicle.

With interest rates being as low as they are at the moment, if you have enough cash in your savings to buy a car outright then this really is your best bet. Even if you don’t have enough to pay the full amount, putting down the biggest deposit possible will help to give you a shorter term with lower repayments.

Buying outright with cash means that whatever your car is worth, you will receive back. This is a much better solution for resale than a long-term finance, as depreciation of the vehicle and interest on the loan can often mean that you receive very little when selling the car.

Financing a Car

When you haven’t got the cash to hand, then financing a car can be a strong option for you. Many manufacturers offer an initial 0% interest rate, making it much more affordable than you may think. Often you will need to put down a deposit, although the amount will depend on the dealership, the vehicle and your existing finances.

Finance is a very common way for people to buy cars and there are many different financing options available to you, including:

  • Personal Loans – you talk to a lender about borrowing money for a vehicle and receive competitive high street rates. This is similar to any personal loan you’ll take out and will be subject to individual credit score etc.
  • Credit Card – if you have a high enough limit, then a credit card can be used to purchase a vehicle, with you paying it off in monthly instalments. This is best if you have a 0% term in which you can clear the debt or move it to another card.
  • Dealer Finance – every dealer offers finance in one form or another, often with rates that are very competitive. This is a common option as it is one of the easiest ways to finance a new car and the deposit tends to be relatively low, i.e. 10% of the vehicle’s list price.
    • Dealers also offer Hire Purchase, which is a way of buying the car in payments without you fully owning the vehicle until the end of term. This is typically very competitive for new cars.

Leasing

Another option that’s available to you is to lease the car rather than buy it outright. One of the best ways of doing this is through Personal Contract Purchases (PCP). This is similar to Hire Purchase, although you typically get a much lower monthly rate and a low deposit, you also have flexible terms which can make it easier to repay.

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Unlike HP or buying directly, you get given several options at the end of the term. These are:

  • Hand back the car to the dealer and pay nothing
  • Trade the car in and start over again
  • Pay the resale price of the car and keep it

This is extremely beneficial if you want to regularly change your car without worrying about breakdowns or large garage bills. However, the downside is that you often have restrictions on mileage and condition of the car which can cost you extra on top.

Overall

Each way of purchasing a car carries its own benefits and they strongly depend on your existing circumstances. If you’d like to find out more about leasing or financing a car then talk to Nathaniel Cars today – we’re here to help you get the best car for your needs and the financing solution to match.

Visit us instore or check out the website for our latest deals on the new range of 2016 cars!

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