UK Car Finance Increasing In Popularity

On Tuesday, the Finance & Leasing Association (FLA) announced that car finance was used for 56 percent of new car sales from January through May of this year. This represents the highest figure since March 2009.

The number of vehicles financed in May exceeded the prior year figure by three percent.

According to FLA Head of Motor Finance Paul Harrison, the uncertain economy has affected the decision making of UK car buyers. Auto lenders are responding with flexible options and competitive offers.

Consumers are realizing that financing is a convenient approach to purchasing a car. They look for affordable programs featuring low interest rates and friendly terms.

With hire purchase, car buyers pay a deposit that is usually ten percent or more of the vehicle price. The remainder of the car price is paid in monthly installments subject to interest of about seven to 13 percent APR.

The individual does not own the vehicle until the contract expires so the car cannot be modified or sold without the permission of the lender.

Zero percent finance deals usually require a deposit of between 35 and 40 percent. The remainder of the price is paid in monthly installments free of interest. Since the term of the loan is usually shorter, monthly payments are higher.

Leasing is a way to get lower monthly payments, which are usually about £100 to £400 but the individual does not own the car, must make a large deposit, and is subject to mileage limits.

Taking out a personal loan is the easiest way to own a car. The individual borrows the money to pay for the car and as long as monthly loan payments are made, the individual owns the car.

Loan terms are often shorter than with financing arranged by a dealer and interest rates vary depending upon the credit history of the borrower.