FROM LEASES TO LOANS A BEGINNER'S GUIDE TO CAR FINANCE

There are different types of car finance available, such as personal car loans, Personal Contract Purchase (PCP), Hire Purchase (HP), and Personal Contract Hire (PCH)s. As with all financial choices and decisions, however, it's important to make sure that you know your Audi car from your elbow. This guide outlines the characteristics of each finance option.

Personal car loan

Let's start with one of the most straightforward ways to finance your new vehicle: a car loan. This involves borrowing a certain amount of money to buy your chosen vehicle. First up, you'll need to work out how much you need from the lender (e.g., a bank or building society), as well as how long you want to borrow the money over. Once your application is approved, the requested amount will be transferred into your account, and you can grab the motor you've been longing for.

You'll then repay the loan in instalments over the agreed term. Bear in mind that the interest rate will vary from lender to lender, but a good credit score should keep your percentages down.

Who is this best for?

A travel-mad family with a pet - with the car belonging to you from the moment you get the keys, there are no limitations on what you can do with the car. With other options, you have to hand the car back in good condition and within an agreed mileage limit.

But with a personal car loan, you can drive as far as you like, and if the car picks up any damage to the interior, there's no expectation to have this fixed unless you want to. It...