HP finance vs. leasing (PCP)

There are many ways to get car credit, two of them are HP financing and the other is Leasing or Personal Contract Purchase.

When taking out a hire purchase (HP) agreement there is a large deposit to put down. This can be between twenty and fifty percent and the balance of the car’s cost is divided over the term of the HP agreement. When the agreement comes to an end the car belong to the driver. The car will of course be worth less than the original price because of depreciation.

The other method of getting car credit is though leasing by way of a PCP agreement. This means you can walk away from your car at the end of the agreement and are not tied in to buy it. It is quite a new way of financing your car purchase. A driver puts down a low initial deposit and then pays a lower amount back each month. At the end of the agreement the driver can either give the car back with nothing to pay (although this depends on the condition of the car and the mileage), they can own the car by paying the final amount or take out another PCP agreement on a different car. This method means you can have the car you wish, even if it would ordinarily be out of your price range, but it wouldn’t be yours unless you could afford to pay it off at the end of the agreed term.

HP finance vs leasing

The lease period on both types of lease is between two and four years typically. With an HP agreement you can repay the balance at any time. There are ways you can lower your monthly payments on both types of agreement. The higher the deposit, the lower the monthly costs. Also, the longer the lease period the lower the monthly payments will be too.

These types of car credit can suit a great many people. Do your research and work out which might be the best offer for you. IF you know you may have some money at the end of the lease agreement then you can buy the car with the PCP type lease, if you don’t this option can still work as you can simply get a new PCP agreement and get a new car. If this agreement is over a long period then it really can work out well, as you get a new car every four years but have lower payment to make than you would if you took out a HP lease. An HP lease though is good for those people who actually want to own their car at the end of the agreement and aren’t that bothered about buying a new car after the agreement has ended.


Buy vs. Lease – Understanding Your Car Finance Options

Buy a new car! Buy a used car! Lease a car! Don’t buy a car — walk! Ride a bike!

Oh boy. There’s definitely a lot of different opinions out there, aren’t there? One minute you think that you’re making all the right moves within your life, only to find that you might be only looking at part of the situation. No matter how you got to this point, you might be in the market for another car. If it’s not brand new, then it’s at least new to you. And that’s what really matters, right?

Well, the truth is that you have choices. You can finance a new car, finance a used car, or even lease a car. But how do you know what the right decision is? Don’t you want to make the right decision? Of course you do! But when you look online you might still look around at all of the different thoughts on the subject and still not know what to do. Sometimes that’s the downfall of personal finance sites — there’s so many people saying different things that you might not realize what to do. You just have to make sure that you take a stand and base your decision on what’s right for you!

So, how do you figure out where you should go in the “buy vs. lease” tent? That’s what we’re going to cover today.

First and foremost, you have to understand how leasing works. Yes, the benefits are many. You’re going to basically get into a new car every few years, but the downside is that you will not have any ownership of the car. This means that you will need to pay full coverage insurance and you will need to make absolutely sure that you are careful with the car. Any accident damage has to be fixed immediately, and that means that you need to push forward and take action right away to make sure that you will be alright in the long run.

Mileage is another thing. Drivers that long to do big road trips might find that leasing really isn’t the answer that they’ve been looking for. You have to estimate the number of miles that you will drive each year. The leasing company will only give you so many miles to go around. If you blow through them, you’re looking at a lot of money when you turn the car back in.

Yes, it’s nice to get a new car every few years, but what about when you own a car that you don’t have to make any payments on? Constantly leasing a car is much like renting a house. Yes, you get the benefits of having a roof over your head, but its’ not like you can make any changes or hardcore customizations. You have to ask permission for everything. And when changes are allowed, they’re expensive — see our notes on mileage in the last paragraph if you don’t believe us.

There are certain people that do benefit from leasing, lest you think that we are throwing out the whole baby with the automotive bathwater here. Self-employed people may be able to write the leasing payment off as a business expense. They’re going to need to check the vehicle rules with the IRS to make sure that they don’t land in hot water before they try to do this. Taking it out in the name of your corporation also helps as well so that there’s no issue of personal liability.

There are some good points to buying your car outright. For starters, you’re going to have a lot of low-interest financing and cash-back offers — especially if you have good credit. That’s because dealerships and automakers as a whole want to make sure that you’re getting into a good car. However, it’s hard to stem the flow of people that buy a car once every 7 years compared to people that buy a car once every 2 or 3 years. Leases turn over a lot faster, because you want to get from one new car to the other. This is also a great time to figure out what you really want to end up owning. Yet if you’re going to do that, you can also rent a few cars and drive them around town to see what you really like and what you don’t like. There’s no point in just spinning your wheels trying to figure out where to go next if you know what you want.

There’s nothing wrong with owning a car outright, and there’s nothing wrong with leasing. You just need to find out what’s really going to work for you and stick to that. That’s what we think you should focus on, anyway! Good luck out there!


Are Long Term Car Loans Really A Good Thing

Are you thinking about a car loan in the future? You’re definitely in the right place! We’re really crazy about car loans, but the truth is that you have to still go in and do your homework to really make sure that you’re making all of the right moves from start to finish. Yes, it’s tempting to just rush into getting a car loan, but the truth is that you’re going to end up making your life a lot harder than what it needs to be. It would be better in life to really make sure that you have things under control when it comes to such a major financial purchase. While we believe in the power of car loans, the truth here is that you’re going to have to think about the type of loan that you get.

For example, should you get a car loan with a long term? The truth is that the longer the term you get, the lower your monthly payment is going to be. When you’re thinking about anew car, a lot of people think about getting a long car term so that they can actually afford a much more expensive car than if they had a shorter term. However, what you really should do is make sure that you use a car loan calculator.

Loan calculators help you really figure out what you might be paying for your car payment each and every month. Calculating is a smart idea because then you won’t be tempted to spend too much money. A nice car is definitely something that everyone wants to have, but at what cost? If you overspend you’re not going to have the car for very long. Even if you manage to keep the car, you’re going to always find yourself wishing that you had a little more money to spend.

A longer term means lower payments, but it also means that you’ve spent a lot of money over the life of the loan. The longer you have the loan, the more interest that’s going to be generated. That’s why a lot of people tend to go with a much less expensive car to start with that has a shorter term. It might make payments a little high in the beginning, but the truth is that as time passes the payments will get smaller and smaller. In addition, you can always help yourself out by making sure that you think about extra payments. Tax time is a great time to make an extra payment on your car loan because it goes straight to the principle before anything else.

Are you wishing for a new car? Then you’re moving in the right direction. The bottom line here is that you want to always make sure that you’re focusing on your overall financial blueprint. Short term desires are nothing compared to long term goals. A car loan with a long term might be what fits into your blueprint, but there’s really only one way to really find out — you’re going to have to calculate it out and see for yourself!


Is it Better To Get a Car Rebate or Low Interest For the Car Loan

Low interest! Car rebates! Cashback! Year end deals! The holiday season is in full swing now, so why shouldn’t the car dealerships get together to figure out how to part you from your money? It’s only natural — they’re going to want to make absolutely sure that they are able to get you in the door with enticing offers. If you have good credit, you’re going to be able to get a lot farther than someone with challenged credit. And these days, getting into a new car is easier as dealers realize that sometimes it’s better to accept someone with a little more credit risk than end up losing the sale just because they couldn’t pull financing. If you have a good down payment you might be able to get into something really nice — you just never know until you find out.

However, before you can actually get too excited about the prospect of getting a new car, you’ve got to answer that pesky problem of financing. You need to figure out whether you should go with the car rebate or with the low interest loan. In a perfect world, you would get both. But this is capitalism at its finest — you’re going to have to pick one in exchange for the dealer giving you a bit of a break. It’s only fair, you know.

Well, in order to figure out which choice actually makes the most sense, you’re going to need to do some break even calculations. We’re going to provide a small example here to show you what we mean:

We are going to assume that you are purchasing a vehicle that offers 2.8 percent financing or $2,000 cash back — the car is $20,000 dollars. To avoid problems creeping in, let’s assume that there is no tax to deal with. We have to figure that the cash back will be pulled into part of the loan for comparison purpose. This means that you’re going to have $22,000 to finance at an average term of 48 months. This will be at 2.8 percent, which gives you a payment of around $485.01 every month. That’s quite a bit of money, but hey — welcome to the world of financing a car, enjoy your stay right?

Right. Well, if you could go to your bank for the financing, you’re going to have to fork out a lot more in terms of interest rates. The average bank loan is about 7 percent — and that’s if you have decent credit. We don’t even want to get into what’s going to happen to you if you don’t have good credit, you know what we mean? It’s definitely a squeeze!

If you go to the bank, you don’t have the cash back — so it’s just the $20,000 that we’re trying to finance. $20,000 financed at 48 months at 7 percent is going to be $478.92. That’s not that much difference — and you might have a better relationship with your bank, to the point where you can work out even better refinancing down the road as long as you prove that you can handle the car payments.

The cost of borrowing comes into play when it comes to understanding why the low interest rate offer is actually a worse deal than the bank offer. You have to add the $2,000 back into the cost of borrowing on top of the interest ($1,280.48 if you’re not playing along with your calculator)

Of course, we’re going about all of this the long way. If you really want to make sure that you know what’s going on you might want to just use an online calculator that lets you break down both offers and tell you which would be better. There’s actually quite a few, and a quick web search will provide you with more links than you can shake a low interest rate offer at — we promise! Good luck out there and make sure that you are always looking at the bigger picture rather than just taking the offer that looks shiny! Start today!


It’s Time to Refinance Your Car Loan – Now What?

Car loan payments too high? Chances are good that it’s time to refinance your car. If you’re not sure what refinancing actually entails, you might think that it’s going to take too much time, or you’re going to have to do a lot of work for little reward. Nothing could be further from the case. You see, car refinancing just means that you’re going to be taking out a different loan that will take care of the original loan that you took out to get your car. This new loan will be at a lower interest rate, which means that you will have a much lower monthly payment than you might expect. You can save a few hundred dollars in some cases, especially if you had to take out a car loan with a huge interest rate just to get a new car worth driving. Once your credit score improves, you should definitely look into refinancing.

There are a few things that you will need to do in order to make sure that you will be able to pursue car refinancing.

First and foremost, if you haven’t pulled your credit report, you should. There’s nothing wrong with knowing exactly what’s on your credit report, and you don’t want to make the mistake of not knowing. Even one piece of incorrect information could lower your credit score to the point where you don’t get the loan that you deserve. It’s better to just push forward and make sure that you’re getting the loan that you need the first time out, so you don’t have to send out too many inquiries in the auto loan shopping. While it’s true that creditors do forgive home or auto inquiries when done in a tight period of time, you still don’t want too many inquiries on your credit report. It tends to hurt your score after a while.

From here, you will need to contact your current lender / finance company and get the payoff balance. Keep in mind this number may be a bit different than what you paid for the car, because it calculates the interest that you owe as well. Write the number down and ask how long the quote is good for. Generally speaking, it lasts for about ten days. After that, you would need to contact the company again and request a new payoff loan quote. It’s very important that you don’t skip this step, because you have to do the total amount in order to fill out any refinancing paperwork.

Speaking of refinancing paperwork, you don’t want to do this offline. Offline rates won’t be as good as online rates, because you want to make sure that the new lender is really fighting for your business. That’s where the power of the Internet comes in. Lenders know that when people shop online, they’re automatically looking for the best rates possible. If you go offline, then the new finance company might think that they can get away with hitting you with a higher rate than what you deserve.

These are the main steps that you will need to take in order to really make sure that you’re going to be able to get the car refinancing that you deserve. As long as you take these tips into consideration, there’s really no way that you could fail!


A Car Loan Calculator Makes All the Difference When It’s Time to Go Car Shopping

Car shopping should be exciting, but when you’re in the middle of so many decisions it can really feel like there’s no way that you’ll ever see the finish line. Now, does it really have to be that way? Of course not! You can definitely find the financing you need, along with the car of your dreams — it just might take a little more planning than you might expect. When you know that you need to get things done and you need a car to do it, time is definitely of the essence. You just need a system to work with, and some tools that can keep you in line when everyone is encouraging you to go out of your budget.

Of course, it goes without saying that you really don’t want to give into that temptation. Why would you want to be car rich and cash poor? That car can’t help  you get extra money in most cases — in fact, it’s going to be a drain on your finances in some way when you really think about the total cost of ownership. This is why you have to take so much time planning for the car that you want, along with the financing you need.

First and foremost, if you take nothing else from this guide, you should really consider using a car loan calculator on your own. You don’t want to wait until you’re at the dealership, because that’s just extra stress that you really don’t need. If you really want to get things done, you will need to take action by getting the best budgeting tool you can get on your side.

The best part about a car loan calculator is that it’s free — no, you don’t need to shell out a lot of money just to get something that can tell you a good estimate of what you should be paying every month from the car. You need to make sure that you get this tool sooner than later, of course.

So, what’s so special about a car loan calculator? Well, in a nutshell it takes all of the components of your car loan and it generates a total that you will need to calculate into your monthly budget. The basic fields for a car loan calculator include the total amount of the loan, the interest rate, and the term of the loan. The longer your term, the lower your monthly payment will be. Generally speaking, the longest that you can keep a car loan around is 72 months, but there have been reports of longer terms being offered to buyers.

Once you enter in all of your information, you will know the monthly payment that you can expect. However, what about that pesky interest rate? Well, it just depends on your credit. If you know that you have great credit, then you can get away with a 5% interest rate. However, if you know that your credit could be better, you might want to estimate 10-15% on your car loan. It just depends on your actual credit score. As you can tell, better credit means a lower interest rate. There are sometimes deals where you only have to pay 1% in interest for the life of the loan — but those are reserved for the best credit risks around, so if you really want to make sure that you get a car loan on the cheap it pays to look at your credit!

Overall, it’s a good time to look into budgeting for and saving up for those car payments. Having a nice new car is great, but armed with a car loan calculator you can actually make sure that you afford it!


There’s Every Reason in the World to Apply Online for a Car Loan!

The thrill of a new car can be hard to beat. Even if it’s not a completely new car, let’s face it — it’s new to you, so it still counts, right? You’re still going to be excited to drive it, and you’re still going to protect it well. However, if you’re not excited right now, it’s probably because it’s also dawned on you that if you really want to get a new car, then you will need to make sure that you get a car loan. In a perfect world, everyone would just have the extra cash to spare to get a car without getting a loan, but this world is far from perfect. Even if you do have the spare cash to get a car, you might want to save that for a rainy day and still get the loan anyway. It just depends on what you really want to accomplish.

The good news that you need to hear right here, right now is that there’s really every reason in the world to get a car loan right now. Now, if you’ve been watching the news you might feel that the world is just too uncertain to get a car loan right now. Yet there are a few flaws to that argument.

First and foremost, the truth is that every economy is uncertain. Even in good times, we don’t know when things are going to get sour. In fact, it’s in down economies where a lot of great deals are. If you have the ability to get a car loan and you know that you can afford the payments, there will be a lender that’s willing to work with you. From the lender’s point of view, it would be better to get a customer that can pay back the loan than not get a customer at all. If this means that they have to be a bit more flexible in the requirements, then so be it.

From there, you have to also think about the fact that cars cost the dealership money for every month that they sit on the lot. So if you’re thinking about securing dealer financing, then you can definitely get that too. Again, the dealers know that people aren’t going to have perfect credit, but they need those cars gone. If you’re excited about getting a new car, then you will just need to make sure that you let them know that you’re willing to make a deal. Even if you have to accept a higher interest rate, then it’s worth that to get a car — especially if you really need one!

Overall, it’s a great time to get a car loan, especially when you think about all of the deals that are available online and offline — what will you get? There’s only one way to find out, and that’s to get started today! You’ll definitely be glad you did!


Think You Don’t Qualify For a Car Loan – Think Again!

Dreaming about a new car? A lot of people all over the country want to get their hands on a new car. Their reasons vary. For some, getting a new car means that they will finally be able to achieve a higher level of independence. On the other hand, some people want to get a new car because their old car is really on its last legs. There’s no reason to live in fear of getting stranded on the road and not being able to actually get anything accomplished.

Yet if you’ve just tried to apply for a car loan and gotten denied, you can really start feeling like the world’s against you. After all, if everyone else around you seems to be able to qualify for a car loan and you can’t, you might think that it really has to b that way. The good news is that it really doesn’t have to be this way at all. Indeed, if you really think you can’t get a car loan, it’s time that you really rethought that mentality in a serious manner.

You see, most lenders realize that people cannot get cars without car financing. Car financing is a source of income for them. The riskier you are credit wise means that they will be able to charge you some extra interest when compared to their “top” customers who have better credit scores and close to flawless credit history. Someone with a credit score of 775 isn’t going to have to worry about car loan rates the way someone with a credit score of 520 would have to.

If you’re the person with the 520 credit score (or something close to it) you might think that such a low credit score means that there’s no way any lender is going to give you a loan. But this isn’t the case anymore — lenders are realizing that there are a lot of great people that just have some credit issues that they need to work out.

No, the new measuring tool isn’t credit history, but actual income. If you have stable employment, then lenders will feel more comfortable lending to you because you can at least pay it back. Unlike other types of loans, lenders know that you will not risk having your car repossessed, and if that means that you might have to skip another bill, you will definitely do so.

If you’re ready to apply for a car loan, you might think that your next step is to go to the dealership. However, this really isn’t the case either. You will actually want to make sure that you go online for a car loan. This will let you actually force the lenders to compete for your business and give you a good car on your next car loan.

If you’re trying to rebuild your credit, you’ll actually find this is a great way to do that. Not only will you get a great car loan and a great car, but you’ll also be able to lift your credit score by making good payments over time — what could really be better than that? Make sure that you apply online for your next car loan today!


Stop Your Car from Drowning You in Debt!

The way you approach buying your car could mean the difference between owning a car you can afford and struggling to make the car payment each month. You don’t have to settle for the cheapest car on the lot in order to stay within your regular budget. You simply need to understand that you have several options that could save you money on your car in the end.

Don’t Settle for the First Offer

Car loans are competitive, just like any other purchase. Lending institutions are constantly changing their terms or offering special deals to entice customers to choose them when it is time to buy a new car. Make sure you do some research into the different rates and deals offered through several lending institutions before you make a final decision. If you decide to accept the dealer’s financing without looking into your options, you could end up paying thousands of dollars more than you needed to pay for your car. It is best to do the financial research before you visit the car lot so you won’t fall in love with a specific car before you find a great deal on rates.

Pre-Qualify Before You Shop

You will be a more powerful car shopper if you walk on the dealer’s lot with a pre-qualified loan in hand. The pre-qualification will provide you with a specific price range that you can comfortably use to choose the right car. You will also cut through the waiting period and much of the paperwork if you have already secured your car loan. Getting pre-qualified will also allow you to find better interest rates or lower monthly payments than you might otherwise get through the dealer’s financing.

Make a Larger Down Payment

Every dime that you spend toward your down payment goes directly toward the principle cost of your car. Try to make the largest down payment possible so that you can reduce the amount of interest you will pay over time. A large down payment can help you reduce the length of your loan and bring down the monthly payments. The longer your loan period is, the more you will eventually pay for the car. Anything you can do to reduce the amount of interest you owe will keep the cost of the car down and help you avoid getting in over your head.

Shop within Your Real Budget

It can be tempting to accept a longer loan so that you can buy a more expensive car. Every extra month you tack on to the loan period adds another interest payment to your car’s price. Establish a realistic budget for your car payments before you visit the dealer, and stick to that budget while you are shopping. It might be tough to pass up that more expensive model, but you will appreciate your disciplined purchase when you have the financial freedom to pay for your car and keep up all of your other expenses as well.

Jessica Bosari writes about personal finance and cars for The site helps consumers compare car insurance rates to get the best price on car insurance every time.


Car Loans

Not many people can buy a car straight off the lot, but acting like you can gives you a better bargaining position when you purchase a used car from a dealer. Take this into account by getting a loan from a financial institution separate from the dealership instead of the financial institution found in the dealership. It is a better idea to get a financing option from a lending company instead of working out a loan through the car dealership. If you get your car loans through the dealership you can often be fleeced for numerous added charges and your monthly payments will be marked up as well.

Having your car loans done through a bank or other lending company will put you into the consideration of a cash buyer through the dealership as you will be buying the car outright instead of in installments. This kind of freedom is nice because you can purchase your car and whatever other accoutrements that might come with it for your car loan and not have to worry about payments to the dealership. They won’t try to over sell you anything because you will have only a set amount of money to spend and nothing more.

This kind of payment will also increase your credit score because you are proving you have the ability to be frugal and smart with your money. This is primarily because your credit report will show the transaction of the car since it is a major purchase and the fact that you don’t owe the dealership anything. Being square in the eyes of the credit companies is your best option when considering future purchases. Your score could take a beating though if you don’t pay off the lending company in a timely manner.

Paying off your car loan is not a tricky business really if you get your loan through a lending company. Car loans through a lending company will accrue interest just like loans from anywhere else. You will have to pay these loans back in a set amount of time and if you are unable the car can be repossessed.

If you are well off enough, you can reduce your interest by putting extra payments against the principle (the initial amount lent to you). Reducing your interest is a great way to lessen your monthly payments while sticking to your intended schedule of payment. Staying up on your payments is another great way to keep future car loans in good standing.