Get your next brand new car for a lot less than you are currently expecting to pay. Merely imagine that there is the chance to save a some cash, which might be spent elsewhere, or you might splash out with the saved cash and instead of putting it away, using it for a more expensive model of a new car.
So, what’s the catch? Well most people assume that to buy a new car you need to go out, find it and find a car loan to match. But this could be a very expensive way to source a new vehicle.
Look at the figures. Take a small vehicle, not even a family car, selling for £9,900. You put down a deposit of £900 and then borrow the rest from the bank. What interest rate might you find? Somewhere round 18%? If so, then you are repaying more than £280 per month or in excess of £10,100 more than the 3 year term of the loan – more than £1,100 above the purchase cost.
On top of this you then need to pay for road tax and breakdown cover. Between them potentially taking the costs over the 3 years to more than £12,000 at best.
However, there is an alternative and that is car leasing. Here, instead of paying off a loan and owning the car at the end you merely pay for the loss on the vehicle. For instance, on the same £9,900 vehicle you should be able to source a deal of round a £690 deposit and for the rest of the 3 years under £150 per month. In total this is an outlay of round £6,000.
New Car Service and Maintenance
What’s more, a contract hire agreement might include servicing, breakdown cover and road tax included in this cost!
There has to be a downside, so what is it? Well at the end of the 3 years you return the car and that is the end of your involvement with it. You can arrange to extend the contract hire lease period or even negotiate a purchase of the vehicle, but at the end of 3 years you do not own the vehicle – you have only been hiring it on a long term contract for the period.
However, with the total cost savings that might be achieved with this method of purchase it is highly possible that the value of the car after 3 years is going to be less than the total amount that you have saved, so you should be quids in.
So, if you are looking for a new way to get your hands on a brand new car, do not only assume that buying it with a loan is the merely way, compare the total payments to the payments on car leasing scheme and you might find that you could make a great saving. And imagine what you might do when you could save on your new car!