Choosing finance for your new car
LAST week, we looked at what optional extras bring to the resale value of your car.
This week, Joe Pattinson, of BMW Group Financial Services, looks at the finance options.
“British culture has traditionally seen people preferring to save for high price-tag items, like cars, rather than relying on external finance.
“Today, attitudes have changed, and BMW currently finances 50 per cent of the cars we sell, with the majority of the remainder being financed by alternative lenders.
“There are a number of car finance options, which can make the ‘car of your dreams’ – be it new or used – an affordable reality. These include hire-purchase plans (HP) and lease including, Personal Contract Plans (PCP).
“An advantage of car finance options like PCP is the low, fixed, monthly payments and a car with a guaranteed minimum future value and flexible options at the end of the agreement. If motorists are purchasing a car using PCP, the future minimum value is agreed at the time of making the purchase, based on the anticipated mileage; in most cases, the cars are worth more than the minimum value and this difference can be used as a deposit on another new car.
“But there are differences between the plans. For example, PCPs are ideal if you like the idea of changing your car every couple of years and reducing your regular payments, and there’s plenty of flexibility, enabling you to keep your options open until the end of the agreement.
“Hire Purchase allows you to spread the cost of your purchase equally over time so it’s easy to budget.”