In the early years, car finance was mainly offered on new cars and direct from the manufacturer. Now you can sort your finance deal through banks, building societies, car dealerships, online car finance brokers and personal loan companies.
You can also get finance for new, used, automatic, hybrid, and electric cars! But with so many different types of cars to choose from, which one can work out cheapest? Are there different finance types that are more complex than others? Let’s find out.
New car finance
New car finance has been around for a long time, and it has been a popular option for many. In some cases, a new car can even work out cheaper than getting a used car on finance. Car finance is based on the value of the car and with new cars, the value is always going to be more than a used car.
Some new cars do suffer when it comes to depreciation in their first year which can affect the resale price. However, despite depreciation, there is still money to be made when it comes to selling the car. Servicing and maintenance costs of a new car tend to be lower than used cars as you don’t know the full history of the used car you are financing.
Used cars on finance
When it comes to getting a used car on finance, you tend to have more availability and choice. Used cars cost less than other options and therefore smaller loans are needed to fund them, which can save you money.
Road tax and also car insurance tend to be cheaper on used cars when compared to new cars. New cars come with impressive warranties too but used car warranties shouldn’t be overlooked.
Many main dealers and even car finance brokers offer their customers warranties of up to 12 months! You may see higher interest rates on used cars though. This is because the history of used cars is not as clear and could mean difficulties for both the owner and the finance company.
Automatic cars on finance
In 2020, around 11% of passed driving tests were in automatic cars in the UK. Due to this, the popularity of automatic cars on finance has also increased in the past few years. Automatic cars are popular as they tend to be easier to drive and promote a smoother ride.
Automatic cars don’t have a traditional gear stick and you only need to change gears to reverse and park. Many people find it more relaxing as there’s no need to change gears or use the clutch. Auto Insurance premiums can be higher for automatic cars as they tend to be newer, more upmarket cars.
Finance for electric cars
Many people want to go green when it comes to the car they drive, but the cost of electric cars can be off putting. However, electric car finance makes it easier to spread the cost into affordable monthly repayments. Electric cars can save you money in the long run when you compare traditional fuels sources with electrical charging.
The biggest benefit of getting an electric car on finance is the impact they have on the environment. They emit fewer greenhouse gases and air pollutants into the environment and reduce your carbon footprint.
Hybrid car finance
There are a number of UK lenders who offer hybrid car finance. If you’re not ready to take the plunge to fully electric but want to reduce your CO2 emissions, hybrid could be perfect for you.
Hybrid vehicles combine a petrol or diesel engine with an electric motor. They consume less fuel and emit less CO2 than petrol or diesel vehicles.
There are two types of hybrids you can get on finance, plug in hybrids and self-charging hybrids. A car finance deal such as Hire Purchase car finance can be used to spread the cost of owning a hybrid vehicle.
In conclusion, the landscape of car finance has significantly evolved from its early days, now offering diverse options for various types of vehicles, including new, used, automatic, hybrid, and electric cars. Each type of car finance comes with its own set of advantages and considerations.
New car finance remains attractive due to potentially lower servicing and maintenance costs, despite the depreciation in value. Used car finance offers greater affordability and a wider selection, though it might come with higher interest rates due to the uncertain history of the vehicles.
Automatic car finance has gained popularity, reflecting the growing number of drivers who prefer the ease and comfort of automatic transmissions, despite potentially higher insurance premiums. Electric car finance supports the shift towards environmentally friendly driving, making the initial high cost of electric vehicles more manageable through monthly payments while offering long-term savings on fuel.
Lastly, hybrid car finance provides a middle ground for those seeking to reduce their carbon footprint without fully committing to an electric vehicle, with options like plug-in and self-charging hybrids.
Ultimately, the choice of car and finance type depends on individual preferences, financial situations, and environmental considerations.
By understanding the nuances of each option, consumers can make informed decisions that best suit their needs and contribute to a more sustainable future.
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