This is gonna sound really stupid but how does personal car finance work? Last time I got a car on finance through the garage I bought the car from. This time I want to get a personal car loan from another company as the rates are better. Do they just put it in your bank for you to pay the garage or does the garage contact them? I have a friend who got one with her bank and it just went into her account so she paid cash to the garage,
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mine just went into the bank and then we paid the garage
Depends how you want to finance it.
At dealerships you get the choice of PCP or Hire purchase (can’t quite remember the name)
Both of those you get an APR rate and how much you pay per month depends on which method you choose, how long you want to repay for and the deposit. With PCP you pay less per month but towards the end would have a balloon payment in order for the car to be yours. The other one there’s you pay a bit more a month but there’s no balloon payment and the car is yours at the end of the contract.
You can whittle down the APR sometimes. Never take the first offer they give you, try and barter. For these options, the dealership sets up the finance agreement and it just comes out monthly as a direct debit. I always go with HP across 4 years to keep repayment down and because my cars last ages since I don’t drive much.
You could get a bank loan- pay the car off using the loan and repay it direct to the bank. You could also use a 0% APR credit card to buy the car and you just pay the bank direct. These are usually the cheapest way
At dealerships you get the choice of PCP or Hire purchase (can’t quite remember the name)
Both of those you get an APR rate and how much you pay per month depends on which method you choose, how long you want to repay for and the deposit. With PCP you pay less per month but towards the end would have a balloon payment in order for the car to be yours. The other one there’s you pay a bit more a month but there’s no balloon payment and the car is yours at the end of the contract.
You can whittle down the APR sometimes. Never take the first offer they give you, try and barter. For these options, the dealership sets up the finance agreement and it just comes out monthly as a direct debit. I always go with HP across 4 years to keep repayment down and because my cars last ages since I don’t drive much.
You could get a bank loan- pay the car off using the loan and repay it direct to the bank. You could also use a 0% APR credit card to buy the car and you just pay the bank direct. These are usually the cheapest way
That’s exactly what I’ve always done. Get approved for a bank loan for the amount to cover the car, take loan out once purchase of the car has been agreed, pay dealer with money from the loan, then pay back the loan. You essentially become a cash buyer to the dealer
Thanks for all the help. I have found some really good deals via clearscore so will go that route. I already have a decent deposit.
A colleague was telling me as I will be paying cash I can negotiate the price but how does that work when you have a loan for x amount?
A colleague was telling me as I will be paying cash I can negotiate the price but how does that work when you have a loan for x amount?
The way I did this, was taking a loan that had no penalty for early repayment, so I had the total cash if needed but could then just pay off whatever was needed if not. The other thing I’ve done before was used the loan cash that I didn’t spent on the car to pay for the insurance outright as I normally pay monthly
the point about early repayment is actually also worth baring in mind. I always make sure my loan can be repaid early without penalty for this purpose but also to allow me to repay if I needed eg because of redundancy etc
Oh thats really helpful! Im not sure why i didnt consider repaying it back early as I have done that before with a smaller loan. Paying your insurance in full is really smart too.
I'm glad you're asking this question, because I'm just at that stage of looking at buying a new car, and I'm looking at the price range that is going to mean I need finance in some way. That decision between a bank loan and HP finance is one i'm needing to decide between.
Just want to say thanks for the advice. I actually ended up getting finance at the garage as the deal was about the same. Pick up my new car friday after work 
Having air con after going without for almost ten years will be amazing!
Having air con after going without for almost ten years will be amazing!