Thinking of buying a new car? Unless youre paying cash, presumably youre looking for the best way to finance the car of your choice.
For people who choose to buy a new car every two or three years, personal contract purchase, or PCP, is gaining in popularity. Your car dealer or the manufacturer effectively lends you the balance of the car, after youve paid a deposit of 20 to 25 per cent. A fixed trade in price is promised at the end of the deal. An annual mileage limit will be agreed and as long as this isnt exceeded you will be offered a choice of options when the contract ends.
The choices will be
1. To return the car and change to a new one.
2. To trade it in at its second hand value this may be more than the guaranteed figure, which makes it well worth doing.
3. To keep the car, making a final payment of the outstanding balance.
Many people simply replace their car every couple of years, using the first option and keeping to the same dealer or manufacturer.
An alternative to personal contract purchasing is a simple car lease plan. An initial deposit is paid, which works out at three times the monthly lease payment. The lease...
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