Cars are rarely ever cheap – aside from the initial purchase cost, there’s fuel, insurance, maintenance and taxes to think about too, which means that any way of saving money is likely to be welcome news for most motorists. One of the first ways in which you can make a difference to the overall cost of things is working out exactly how you’re going to fund things in the first place. Let’s take a look at your main options.
Image credit: Tom
Outright Purchase
If you’re buying a car that’s a few years old, then you’re probably thinking about purchasing it outright from the dealer or seller. The main benefit of this is that you aren’t going to be paying any interest or additional fees on the price of the car. Generally, it’s the cheapest way of getting the vehicle on your drive. However, this does mean having to come up with all of the money at once, which is certainly not ideal for everyone.
Finance
Next up is getting finance. This could be in the form of a credit card, a general-purpose loan, or specifically a car loan. Through this method, you are able to spread out the cost of the car over the time you own it. This is generally much easier to manage for most people than a large lump sum. The trade off is of course that you’ll have to pay interest and potentially other fees, which means that the car ultimately costs you more money. As with purchasing the car outright, things like depreciation will be a significant concern to you.
Leasing
Leasing is a very different way of doing things to the other two, but can have major benefits if it’s the right choice for you. Like normal finance, you spread out monthly payments over the life of the agreement, but there are a variety of ways of doing things to bring down the cost, and you never actually own the vehicle whilst making payments. You may for instance lease the car for three years and then give it back at the end of the agreement. You don’t need to worry about depreciation, and the monthly cost will be lower than if you’d paid for the car outright. Take a look at Car 4 Leasing to get more of an idea of what’s available when you choose this method of funding your next car.
