Personal loan or hire purchase: which is the best type of car finance for you?
Perhaps you need transport to get to work; perhaps the local takeout is infuriatingly far away if you have to get there on foot. Either way, you’ve decided it’s time to buy a car. There’s just one problem: you’re not sure whether you should finance the purchase with a personal loan or with hire purchase. These are two of the most widely-used forms of car finance, and choosing between them can be intimidating. But never fear, we’re here to help you compare the two and reach a decision!
A personal loan is the first option
Available from loan companies and banks alike, this option simply lets you borrow the money to purchase the car outright. You’ll still have to pay back the debt, of course, but the car becomes yours immediately; you can hang your fluffy dice in the windshield secure in the knowledge that if you happen to miss a payment, there’s no danger of them (or the car) being taken away. This may be the option for you if you’re confident in your ability to handle debt and have a good credit rating.
Hire Purchase is the second option
You agree on a deposit to be laid down with the dealer, then pay off the remainder in regular monthly instalments. You don’t own the car until the final payment has gone through (so, sadly, you have to hold off on any neon-hued custom paint-jobs you might be contemplating). You still have the use of the vehicle before that time, however, as you are considered to have hired it from the finance company. This may be the better option if you’re confident you can keep up the payments on the car but wish to avoid a personal loan.
Whichever option you choose, remember to obtain your car finance from a source you feel sure you can trust. Bear that in mind and, before long, you’ll have a car to call your own… including the fluffy dice and questionable paintwork.