Identifying what you can afford
If you’re buying a new car on finance there are a lot of factors to consider. Knowing what you can afford is crucial, and that can be a complicated picture when there are so many finance products available to you.
Should you go for Personal Contract Hire (PCH)? Hire Purchase (HP)? Or might a Personal Contract Purchase (PCP) agreement be right for you?
You’ll need to do your research, and you’ll definitely need to work out your budget.
Additional costs to consider
If you have all these details to hand you’ll be able to make the best decision on which finance product to select to suit your needs
But, when you’re budgeting for a new car, the finance plan you choose is just one part of what you need to consider. It only tells you the cost of owning the car. What about running it?
Over the course of a year with your new car you’ll be paying for fuel and insurance, for car tax, and for servicing and maintenance. Some of this might form part of your finance agreement depending on which product you take out; either way they’ll affect what you can and can’t afford when you choose your new car.
It’s also useful to know how much your car’s value can be expected to depreciate over the course of a year, or the duration of your finance agreement.
Finally it is also worth considering how much disposable income you have