Choosing a car is the easy part but where do you start with car finance, there are so many options available, with so many packages readily waiting we look at the most popular choices.

Hire purchase has been a strong finance option for a long time, the entire cost of the car is divided over a set period of time usually between 3-5 years, and then a monthly payment plan is calculated based on the number of month and interest charges.

 It has similarities with borrowing from a bank or building society you agree a fixed amount of money, the cost of the car and then you decide your term. Your monthly repayment will depend on the cost of your chosen car and the term you chose, by opting to extend the term you will pay more interest but your monthly repayments will be significantly lower.

 You can also make your monthly payment lower by putting down a larger deposit, this will save you a small fortune, as this come off the price of the car then this figure is divided by the term and interest applied, if you do both this will reduce your monthly repayments further.

Personal Contract Purchase has grown to be one of the more popular choices amongst individuals looking to finance their new car.

This finance option is simple and quick to set up which is a huge luring factor and the main reason for its popularity. There is an initial payment but it is relatively low and the monthly repayments are also affordable.

This is because you defer the cost of your chosen car to the end of the term. At the end of the term the owner has four options these are to make a balloon payment for the outstanding amount and own the car outright, choose to use the GFV (guaranteed future value) of the car as a down payment towards their next vehicle from the same company’s fleet of cars, re-finance the remainder of the cost into affordable monthly payments or sell the car on privately, keeping the difference (if any) after paying the company what is owed.

Due to the number of options available with this finance option it is the most sought after, especially amongst those that like to change their car frequently.

Personal loans are the other option most car buyer chose to go for, this is a loan arranged through a bank or building society and usually can work out more cost effective. The interest rates offered by financial institutions are often lower than the other 2 options mentioned above. Of course it has its other points to consider, as the loan is through a bank or building society you will own the car fully.

This means you can not hand your car back after a set amount of time so you better make sure it is the car of your dreams.

However you chose to finance your motor vehicle be sure you are comfortable with what you are signing, ensure you can meet the monthly repayments and don’t feel pressure from the dealership sales team to go with what there offering.