Best Ways To Finance Your Next Car

Important financial decisions hit all of us at some point, so it is important that we are capable of weighing up the pros and cons of the situation and making carefully selected choices on deals which make the most financial sense.

Yet, when it comes to cars it is common for the rational approach to go out the window and our heart tends to rule our head, rather than the other way round. Buying a new or used car is a major financial decision and thankfully car financing has changed in recent years: now there are many different ways to pay.

Each method has its own merits, but each carries potential pitfalls which can catch out an unwary buyer:

Bank Loan

A loan from your bank or other financial institution will make funds available immediately for you to purchase a vehicle. In most cases, but not all, you loan may be unsecured, and your interest rates will vary depending on your credit history and the source of the loan.


Cash is still king in the used car market, although it rarely features in the purchasing of vehicles in the upper echelons of the motor industry. Cash is often thought of as an interest-free alternative, but this isn’t entirely true as interest can be earned as well as paid.

Dealer HP Finance

Most new and used car sites and dealers offer HP finance from car manufacturers or from specialist car finance companies. This finance involves the payment of a deposit followed by fixed monthly payments. This almost invariably means that the car is subject to negative equity and such loans are secured against the vehicle itself.


The simplest and most easily understood way to purchase a vehicle for a fixed amount of time; owners pay for the time they use the car before returning it. Long term options are available.