Car Loans

There are many factors that go into determining which option - car financing or car loan - is best for you when buying a new or used vehicle in the UK. Carefully research and consider all options available. It might be helpful to write down the most important criteria for you and compare side by side.

Vehicle ownership has plusses and minuses. It is good during stable times, with a well-running vehicle. It is bad news during uncertain times, with potential break downs and decreasing car values.

Leasing is good for the short term. It is good for businesses that don't need to own a car fleet. Financing allows the customer to "test" the vehicle first - try before you buy. If it is a lemon, then the customer can return the vehicle to the dealer.

Car finance is limited by the dealer's options of lenders, most are tied to one supplier. Financing is a better option for those who are certain of the vehicle and the dealer. It is believed that the dealer should give you a better deal if you finance with them but you will never know unless you uncover all of your options.

Many leasing options are available including Hire Purchase, Lease Purchase and Personal Contract Purchase. These have different repayment rules and differ over the customer's option for purchasing the vehicle at the end of the contract period.

Car loans allow for more flexibility and a greater choice between lending institutions. Interest rate packaging should be more flexible and varied. These allow choice amongst car sellers - dealer or private.

One danger is the possibility of "negative equity" - owing more on the car than it is worth. Be sure that you are repaying the loan at a level which at least keeps up with the depreciation in the cars overall value.