More than 1.49 million used cars were financed in the UK during the 12 months leading up to February 2020 according to Statista. This shows how popular financing a car truly is, with a majority of Brits opting in to finance a vehicle via PCP or HP deals instead of buying it outright.
This year has been tough for the car industry, however, it is showing signs of recovery by reinventing the business model by delivering cars to customers, click and collect, as well as offering car finance online.
Car finance payment holiday term was trending on Google during March-April months this year, which shows that keeping up with the payments during the pandemic is tough for many people.
So, is it worth getting car finance in 2020?
Car registrations in the UK were down by -30.71% when compared to 2019. It isn’t good news for the automakers and sellers as unemployment rises and the spending power decreases. However, when looking at year-over-year more new cars were registered across Europe, China and the US.
Getting a car in 2020 can be beneficial as governments across the world have encouraged the use of private transport to minimize the risk of the virus.
It could still be worth getting car finance so that you can have the freedom and decrease the danger of using public transportation – especially if you’re going to work every day.
Personal loans or financing?
Another question to ask yourself is whether you’d like to get car finance or purchase it with cash or a loan from the bank.
With the car loan, the money is sent to you right away and you can use it to buy a vehicle outright. This means you have a few options, such as buying from the dealership or privately which has its advantages.
Meanwhile, car finance can only be used to fund a car from dealers or manufacturers. You also won’t own the car straight away, only after paying a balloon lump sum at the end of the agreement.
Hiring vs owning a car
Advantages of owning the car mean you won’t need to stick to mileage limit and possess a car so can modify it and sell it whenever. However, keep in mind that your car can depreciate significantly if it’s a new one, so it will be worth less when selling. If you want to finance a car and own it at the end, the most popular contracts are HP (Hire Purchase) and PCP (Personal Contract Purchase).
If you’d rather not worry about these costs, perhaps hiring a car via PCH (Personal Contract Hire) is the right option for you. Some dealerships include servicing and maintenance as part of the deal so it can be an excellent option. You won’t be the owner of the car so it’s not the right option for those that want to have a vehicle at the end of the contract. Additionally, if there’s damage that exceeds Fair Wear and Tear, you may need to pay for the damages – this applies to PCP as well.
As you can see, there are many different options to accommodate various needs, so everyone can find something to suit them.