Cars are the ultimate luxury for many that are still reeling from the affects of the economic recession and people are having to find new methods of acquiring a car to ensure they are able to transport themselves from one destination to another.
Car finance has always been a common method of achieving a new or used vehicle that makes car purchase affordable and a reality. Most car retailers such as www.jenningsmotorgroup.co.uk offer the opportunity to take on a finance package with varying benefits, terms and costs available to suit both the consumer and the seller.
Finance packages allow the consumer to have a more valuable and modern vehicle at an affordable cost, something which would be impossible without financing.
Common Finance Packages
There are three main finance packages that can meet the requirements of the car buyer but as with anything care and consideration must be taken to ensure that the package selected is affordable and the terms are realistic to a specific situation.
Hire Purchase is the most popular form of finance package that most if not all retailers offer. A deposit is paid to secure the vehicle, which can often be a part exchange car or a lump sum.
The remaining value of the car is paid through monthly instalments, an amount which decided depending on the length of the contract term. After the final payment is made the car belongs solely to the consumer.
Personal contract purchase works in much the same way as a hire purchase. A deposit is paid upfront and monthly instalments are required to cover the cost of the car. The monthly payments are lower for a shorter term as a lump sum is required to be paid at the end of the contract for the consumer to take ownership of the vehicle or you have the option of handing the car back.
In principle, if the car is returned, the car has simply been rented for the duration of the contract term.
Lease purchase requires a deposit and lower monthly payments with a final payment expected at the end of the finance contract duration. The final payment however is subject to change if the car is worth less than the amount owing.
There is also the opportunity to part exchange or sell the vehicle provided any finance owning is settled. (Think along the lines of house negative equity)
In 2011, 26% of car buyers used finance to acquire a new vehicle showing that finance is quickly becoming the most common method of acquiring a vehicle but there are risks and requirements involved and care must be taken before a finance package is accepted to ensure it is affordable and can be maintained in the long term.
The retailer is there to offer advice and guidance and it is always beneficial to discuss finance options with the expert. 70% of cars are purchased through finance and retailers are becoming more in tune with the needs and the requirements of the consumer and the issues they face when attempting to purchase a vehicle.