Financing New Car Dealer Cars

So you’ve decided its time for a change and purchase that brand spanking new car that keeps catching your eye looking ever so shiny in the local car dealership window be it a Ford Car Dealer or any other Dealers or even a car supermarket.

Just a slight hurdle to get over – how will you pay for it? The good news is there are numerous ways you can purchase your dream car and here are a few pointers on the best way to go about it.

As most people don’t have large sums of cash readily available to buy a car outright the most common ways to purchase your new car are through a loan or finance agreement.

If you are taking a loan out with the dealership the first piece of advice is to be realistic, can you afford the final price the sales person is suggesting to you, this will depend on

• The monthly payments and any additional payments at the end or start of the deal
• The interest rate you're paying and the repayment period
• Any penalties you'll incur if you pay off the loan early

Speak to your Ford car dealer or car supermarket representative to clarify the above point, be sure to take your time.

A loan partly funds many new car purchases so if you can get a zero per cent finance rate you will more than likely be better off. Some of the advantages of a loan are that you choose your repayment term, there are no restrictions on the type of car you buy or how many miles you cover and you do not need a large deposit up front. The car will also be yours from day one, but if you take out a secured loan, bear in mind you could lose your home if you don't keep up repayments - and lenders are very choosy. Often, the more you borrow, the better the interest rate you'll be offered. But you've still got to pay the money back (with interest), so don't get carried away by just looking at your monthly outgoings.

Always check the APR (Annual Percentage Rate), lenders charge interest on the amount you borrow. The APRs quoted will usually be typical rates, use these as a guide as the exact rate offered will be on an individual basis.

Shop, shop shop around! Visit price comparison sites and high street banks, they may offer a better loan than the dealer.

Ask your salesperson to work out a finance plan for you with and without any extras then you can see exactly what you’re paying for.

Personal Contract Plans mean you are effectively just funding the depreciation on your new car. Unless you buy the car at the end of the contract, you never get to own it. As with HP you pay a deposit and monthly instalments however these instalments are generally lower. Many schemes include servicing and maintenance in the price. There is a final payment called the minimum guaranteed future value (MGFV), also known as a balloon payment. This is usually a large sum, which means you either have to buy the car outright, walk away with nothing, or swap to another PCP scheme. There is usually a mileage limit, which can't be exceeded without the payment of a stiff penalty at the end of the contract.

Hire Purchase is a cross between a loan and a personal contract plan. You will need to pay a deposit then the balance in monthly instalments however the car only belongs to you when you have made the final repayment. If you default on the loan, your car can be repossessed. The monthly payments may be higher than with some other finance methods, but the overall sum paid back is generally lower. Contract Hire Cars.

GAP insurance (Guaranteed Asset Protection). A finance company may insist you have GAP insurance if you are a high risk driver or if you have put down a very small deposit. It is there to protect you should your car be stolen or written off and you can not pay the money back You don't have to take out GAP insurance and it is unlikely to be worthwhile if you've put down a large deposit. You can pay for it as a one-off fee or maybe as part of your monthly finance repayments.

Payment protection No one can guarantee the future and payment protection is there for those whose circumstances take a bad turn such as illness or redundancy among others. If you did become ill or lost your job would you be able to keep up the repayments on your car? This is when you need payment protection which is normally paid monthly alongside your finance repayment. Check to see if you are eligible for it, if you're long-term sick or self-employed, there is a chance this wont be an option for you. Don’t expect you car to be paid off as there may be a limit to how payments are made under the scheme. It may also not kick in immediately - you may have to find the money for the first three months after a change of personal circumstances.

So remember shop around, and don't be afraid to haggle, if there is something you don’t understand - ask. Finally let your lender know if you have are financial difficulties, it is in their interest for the money to be paid back.

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