Whether people realise it or not, buying a car is a large purchase and it comes with its own commitment issues and requirements. One of the main commitment concerns related to the famed finance option is the surprisingly steep interest rates and the price you pay if you make the mistake of coming up short and don't stick to the vows you promised to keep when you were joined in the holy union of devotion and debt to your precious 4 wheeled significant other.

Rewind back to a few generations ago; let’s say to the glorious year of 1998, only 10 years ago and yet the approach to making any big purchase which a car was deemed to be was so incredibly different. Before making the decision to even look for a car required some form of capital in your account, even if it was only to put down as a holding deposit.

Fast forward to the current day and there are numerous options made available to all, whether your bank account is bountiful or not. In the arena of car loans there are a number of ways to finance your dream car, from PCP to HP, CP to contract hire is it any wonder that plenty of people are left in the dark about the best option for them and simply o along with whatever the salesman suggests? This uninformed blind-trust approach has heavily contributed to the current catastrophic state people’s credit appear to be in worldwide.

Maybe it is the whole buy now pay later attitude that has given birth to the current credit crunch that has so many lending institution in a quandary. By understanding what the actual terminologies mean hopefully individuals will be in a better position to make a good buy as opposed to waving ‘good bye’ to their once healthy credit.

PCP has proved to be one of the most popular options amongst individuals seeking to finance the purchase of their car, possibly because it appears to pose the least threat on a long term level. The low monthly payments, the non essential deposit and the guaranteed value of the car at the end of the term are all contributing factors as to why this has proved to be so popular.

Adding to this are the numerous options made available at the end of the term, you don't have to worry about re-financing the car if you’d rather drive a whole new car, all you have to do is simply hand back the vehicle and start afresh. That doesn’t tickle your fancy, rather try your luck on the private sales sector and pocket the difference? That too is fine, or maybe you have in fact fallen in love with the car and want to keep it for another few years, well that too is an option, you just re-finance the amount owing and hey presto you get to keep your baby and doing so is even more affordable as the outstanding amount has been vastly reduced, invariably having a positive impact on your monthly payments.

Still the question remains; is this the best way to buy or are you simply deferring the detrimental crumble of your entire credit history until the end of the term when you glance at the paperwork and gasp at the amount of interest you’ve paid over the years and feel like you’ve been duped realising you have actually paid out the cost of two cars or the full cost of that luxury car you assumed was out of your reach.

So is financing your car utilising the PCP option the best way or is it the only way you think you can realistically afford that shiny four-wheeled Betty in the corner of the car lot? To answer that question and to help you find the right car loan for you,read the following sections of this 4-part piece on car financing.