What are the options to finance a car?

Buying a car with cash is not an option for most people, unless the car you are buying costs less than a new iPhone X. But you have the cash? Many financial gurus would tell you to invest it somewhere, as the interest rates are currently so low, meaning your own money would earn you more money than the monthly payments you would be making with the financing.

So what are my options to finance a used or a new car?

Buying a new car is always exciting, especially if you are not buying it from the dealers parking lot, but have the option to choose different colours, materials and options.

Once you have done your homework and are all set with the make and model, you need to figure out how to finance the car. Not as easy as it might seem at first. It is more than just monthly payments, there are many different ways you can finance your purchase.

The most common ones are hire purchase and personal contract service.

With the first one you pay the initial deposit and the rest of it with monthly payments. Once the final payment is sent, the car is yours.

Personal contract service is for people who want to keep their car as new as possible. You pay the deposit, monthly payments for a fixed period with the option to buy it out in the end with a lump sum or start a new contract for a different car. Many people do buy the car out, sell it and then start a new contract.

Another option is to take a loan and finance the car this way. That leaves more options on the table, depending on the loan terms.

Here’s a quick overview of different financing options by HSBC:


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