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
|
