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Different Types of Car Finance

Car Finance

Nowadays, cars are one of life’s necessities as it helps people get around to the places that they need to whether if its work, education or entertainment purposes. Cars which are used for their own even for even just a short moment of time can be helpful especially when travel is done frequently which can help in cutting back the expenses a person has to pay from the daily transportation fees. In order for a person to have a car, car finance exists to give these people a hand. Car finance is basically a form of financial assistance to clients which can help them avail of a vehicle in different ways and it comes in several types. Here are three different known types of car finance and what they can offer to interested individuals.

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Car loan

Perhaps the most popular type of car finance is the car loan. Car loans are available in banks or lending institutions which allows clients to own a car by paying off for a successive number of months for a set number of years as stated by the bank with an additional interest which helps the bank or lending business earn for their own. There are several advantages to having a car loan and one of the best known is that it helps in improving the person’s credit score. Car loans then branch out into several options which can help the person identify which type of car loan is best for him and his financial status.

Personal contract purchase

Another car finance type is the personal contract purchase. A personal contract purchase is another way for people to avail of a car but with several benefits. This car finance type gives clients the chance to return the car to the company supplying the vehicle or have it traded for another model or of the same type should there be a problem with the car the client has chosen. Personal contract purchase has a similar scheme with the hire purchase in which it also requires an initial payment to be made before proceeding with the monthly payments to be completed within the given amount of time but differs only in the choice of having the cars exchanged or returned.

Hire purchase

Hire purchase is a type of car finance, as mentioned earlier, that basically shares the same methods with the personal contract purchase in terms of the payment scheme which basically follows having a down payment made first then proceeding to the monthly payments. What makes the hire purchase different from the personal contract purchase is that the car may not be released right away to the client and may have to be paid in full prior to receiving the said car.