A Comparison of Different Financing Options for Vehicles – and Why Car Leasing is the Best

If you are thinking of having a new car, you have a world of options for financing indeed. These different financing options have their own set of merits, and some are certainly more tempting than others – but is it right for you? There’s the question of cost, for one, and you also have to consider other variables that include the rate of interest, the terms, and, most of all, the car’s depreciation. If you are wondering which financing option could give you the best deal, here’s a comparison of different financing options for vehicles – and why car leasing is the best.

The top ways you can get a vehicle:

  • Cash – with the cash option, you don’t have to deal with any agreement, and you don’t have to come up with an initial deposit. You have the cash to pay for the vehicle, after all, and it will be yours from the outset. But realistically speaking, not many people can pay for a car in cash, and although this may be the most beneficial option, it is simply not possible for many. 
  • Credit card – if you have a credit card and are willing to use it, the typical terms of an agreement when you pay with your card with 0% interest is 20 months. There is no initial deposit requirement, but you will not own the vehicle until you repay your credit card debt. 
  • A personal loan – if you go for a personal loan as a financing option, the standard length of the agreement can extend from one year to seven years, and you don’t have to deal with an initial deposit, either. Similar to paying by credit card, you will not be the full owner of the vehicle until you settle your debt. 
  • A personal contract purchase (PCP) agreement – PCP deals can last from one year to five years, and you will also have to come up with an initial deposit. The financing firm will own the vehicle unless you opt to make a balloon payment for the vehicle at the end of the term. With this arrangement, you have restrictions on mileage. 
  • A hire purchase (HP) agreement – Hire purchase deals can extend from one to five years, with an initial deposit requirement as well. You will not own the vehicle throughout the entire deal until you make the final or last repayment. 
  • A vehicle leasing or personal contract hire deal – with vehicle leasing or contract hire deals, the agreement can last from one year to up to four years, and you will make an upfront deposit, usually equal to about three to six months of the car’s monthly rental fee. The leasing provider is the vehicle owner, and there is also a mileage restriction or limit, although you can extend this limit at the beginning, so you don’t have to pay a mileage penalty at the end of the deal. 

As mentioned, each option will have its merits, but vehicle leasing has proven to be the most feasible for many. It not only allows you to use higher-end models because of the lower monthly price, but it also frees you from worrying about depreciation. There is less responsibility as well because all you have to do is return the vehicle at the end of the contract and go for another leasing deal with another new model if you so choose.


Range Rover Sport Coupe by Bulgari Design revealed
2015 MG CS Crossover /Compact SUV spied for the first time
V8-powered Volkswagen Amarok by MTM to debut in Geneva
New 2015 Nissan Murano revealed with Resonance-inspired styling
2015 Mercedes-Benz MLC (ML Coupe) prototype spied on the Nürburgring
Blast from the past: Xcar takes a closer look at DeLorean DMC-12
Ariel Nomad off-roader revealed with minimalist styling and rear-wheel drive
Vauxhall GT Concept revealed ahead of Geneva debut
Volkswagen I.D. concept car previews new generation of electric cars
Land Rover builds compact Christmas cabin for Santa
Alpine reveals the first images of the new A110
McLaren P1 LM sets 6min 43sec Nürburgring lap time