Choos­ing fi­nance for your new car

Yorkshire Post - Motoring - - NEWS -

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.”

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