UK car classifieds

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UK new or used cars and dealerships buying/selling cars

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  5. Comparison of different car loans and car finance options

Comparison of different car loans and car finance options

The table below shows you the advantages/disadvantages of getting the various types of loan or credit finance. It is only intended as a guide for comparison of different car loans and car finance options and you should check the various options for yourself before making a decision on the car loans that you think might suit your own circumstances.

Advantages Disadvantages
Personal loans
  • As a cash buyer can negotiate a better deal
  • You own the car immediately
  • Not secured on the car
  • No risk of repossession of car
  • Freedom of choosing any car you want
  • May not be cheapest loan
  • Harder to get
  • May need security
Car loans
  • May get extra benefits such as discounts on breakdown cover, insurance or related services
  • Easier than getting a personal loan
  • May be secured on car, so missed payments can result in repossession of car
  • Car is not yours until full payment made
  • Not available on all cars
Hire purchase (HP)
  • Easy to arrange this type of car loan
  • Can work out a cheap option for a loan
  • If you have difficulty getting other types of loans, this is easier to get
  • Car is not yours until all payments have been made
  • If you miss payments, your car can be repossessed
  • Long loan periods can mean you pay much more for a car than it is worth
Personal contract purchases (PCP)
  • Lower monthly payments than other loans
  • Suits people who want to upgrade their car frequently
  • Good option for company car driver opting out of the company car scheme
  • Flexibility of choosing payment terms and deposit
  • Highest cost loan overall
  • You Don't own car, unless you make large settlement at end
  • A large payment is necessary at the end if you want to keep the car
  • You are required to maintain the car to a high standard
  • There may be penalties for termination
Manufacturers' schemes
  • Secured loan, so easier to get a loan for a higher amount
  • Easier to get than most other loans
  • Competitive deals offered by manufacturers and dealerships
  • Less freedom of choice on make and models of car
  • Usually restricted to new models
  • Car is not yours until final payment made
  • Repossession very likely if payments are missed
  • May have a higher interest rate than some other loans