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Car Finance

Not many of us can afford to buy a car outright without having to take out a hefty loan. At the same time, borrowing large swaves of money with no guarantee of return shouldn't be done lightly - and if you're a first timer, it's easy to make the wrong decision and end up in serious financial difficulty a year or two down the road.

Personal loans

Personal loans are popular among consumers looking to finance a single expensive outlay - e.g. a new car or flat or even household appliance.

In short, they allow you to borrow a fixed amount over a fixed period, and simply require that you pay back a specific amount each month - usually at a pre-determined interest rate that won't be affected by the temperamental whims of the open marketplace.

You can borrow anything from a couple of grand to twenty or thirty thousand, but it's important to note that interest rates will be higher if you opt for a larger loan - and that means you will find it more difficult to repay if your financial situation or career stability changes a few years down the line.

With low interest rates and fixed repayment schedules, personal loans are among the more consumer-friendly methods of borrowing out there, and with that comes responsibility on the part of the borrower. In other words, companies expect their good faith to be reciprocated, and are apt to turn you away if your credit rating isn't relatively blemish free.

Hire Purchase

As the name suggests, a Hire Purchase payment method involves you essentially hiring a car over the period where you pay for it via monthly instalments.

This usually involves placing a deposit of around 10% of the car's value and then agreeing a long-term plan of buying it (this can take as little as 12 months but, depending on your finances, can also be spread over five years).

There are some obvious downsides to doing this: as you won't own the car outright your rights as a consumer are severely compromised, and failure to make payments on time will put you in trouble - to the extent that the company you're hiring from could choose to reclaim their asset.


Leasing is quite similar to a Hire Purchase - with the main difference being that you don't get to keep the car at the end of the agreement.

While it does mean you'll never own the car outright, it should also result in much lower monthly instalments, and mean that you won't have to worry about the car depreciating in value.

You can also simply upgrade to a newer, more economically sound model when your contract is up, without having to worry too much about wasting money - after all, you're only using it for a few years. In an era when cars are effectively made obsolete within just a few years of their launch, leasing makes a lot of sense.

One thing worth noting about leasing is that causing damage to the car could set you back, and unless you get it repaired on your own buck you'll find yourself paying through the nose via the company's own insurers.

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