Best Options for Buying a Used Car

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Purchasing a second hand car is an ever-popular choice for drivers looking to make a saving where possible. Brand-new, fresh off the factory floor models carry a high price point, but thankfully there are plenty of affordable options from a slightly older model or one with a few miles on the clock. There are many ways to approach buying a used car including from a dealer or directly from a private seller. To help buyers find the best options, here is our quick guide on what to look for when buying a used car.

Affordable Finance Options

If you are fortunate enough to have savings to cover a car purchase or are buying a vehicle for a low price, you may not require vehicle finance. However, the vast majority of car buyers do so use some form of finance option to help spread the cost of their dream car. Taking out car loans in the UK enables buyers to spread the costs of the purchase, making it much more affordable than a one-off payment. If this is in line with your circumstances, then understanding which options are available is important. Some car finance companies will enable you to find both the car and finance option together under one roof, enabling you to spend less time looking for finance elsewhere, for example, a personal loan with a high-street bank. 

The types of car loans you can get with a car finance company include: 

PCP – Personal Contract Purchase (PCP) is where you can pay a deposit and then pay a loan term plus interest usually for 3 to 5 years, during which time the car is owned by the finance company. At the end of this term, you can then give back the car, pay a ‘balloon payment’ to own the car, or use the value towards a new car.

PCH – Personal Contract Hire (PCH) is a leasing option, where you do not own the car during the repayment period. The idea is that at the end of the term, you will give the car back to the company and start again with a new vehicle.

HP – Hire Purchase (HP) is where you pay a deposit, and the remaining value plus interest is spread over monthly instalments typically between 1 to 5 years. At the end, you own the vehicle.

Which Finance Option to Choose?

There are various details that are important for each of these options, but PCP and HP are both ways to eventually own the car outright. The repayments for a PCP agreement can be smaller than on HP, but this is because you are only paying off part of the value of the car plus interest. You then choose to pay off the remaining value or give the car back, depending on your circumstances. You also can decide to start another PCP agreement with a different car by using the remaining value towards it. This is where HP agreements can be relatively straightforward, but usually mean you will pay a higher monthly amount. 

Each type of car loan option has its advantages and disadvantages when compared to each other, so finding the right fit for your circumstances is crucial. Unlike buying a car with a personal loan through a bank, both HP and PCP are secured against the vehicle, so you do not own the vehicle. This means you cannot sell the car during the term, so you will need to consider this before proceeding. 

Once you’ve understood the different finance options available, you can proceed and finally get that new car you’ve had your eye on.