Are you a reluctant new car shopper because of the cost and inconvenience of selling your existing car and hunting a new one? If you are reluctant, chances are you have been forced in to the market for a new car because you have outgrown your existing vehicle or its performance is no longer suitable. If that is the case, then you might be facing the problem that you aren’t financially prepared for of the purchase of the new car which may restrict your ability to get the car you want or need.

However, this is only a problem if you aren’t aware of the different possibilities that are available to you when you’re looking to fund your new car purchase. A cash purchase may be a favourable option, but with 80 percent of the car buying market opting for car finance deals instead, it’s clear just how popular finance packages have become. To make the right decision, what you need to do is look at the reasons for a new car and consider the following car ownership preferences.

Do you use the car solely for personal reasons or is it used partly for business?

Do you tend to keep a car for many years or swap it after three or four years?

Are low monthly payments more important than actually owning the car?

These are important questions to consider because car leasing could be the type of finance you would like.

If ownership is not a big issue and you would prefer to reduce the amount you pay each month then if you lease a car using PCP you won’t own the car whilst you’re paying your monthly payments (although you do have the option to buy it once the lease agreement has ended), and for this reason you have lower monthly payments than if you bought the whole car. However, if car ownership is an issue because want to retain the car for more than 5 years considering various types of car loans could be the best finance option.

Whilst car loans do mean that you pay more each month as you’re spreading the whole cost of the car over the agreed term, you own the car from the start and once you’ve paid your final monthly payment, there’s nothing left to pay and you can do with the car as you please.

A third alternative that has similarities to leasing and car loans is a hire purchase agreement. With hire purchase you spread the cost of the whole car (therefore more expensive than leasing)over a chosen number of months but you will not own the car until you have made the final payment at which point it would be silly not to take full ownership.