There are a number of options available today to finance the purchase of a car. One needs to select a particular financing option depending upon the individual needs and circumstances

People who are 18 and above can opt for any of the following car financing options:

Personal loans: Personal loans can be used for any purpose. They present the simplest means of purchasing a car. Personal loans can be availed from banks, retailers, building societies, other lenders, etc. With personal loans, a borrower can borrow up to £20,000 or £25,000 for a period of 1 - 7 years. Online loan quote comparison and online loan application help you save money. Personal loans also allows a borrower to own the car from the beginning.

Car loans: Car loans are similar to personal loans but offers an incentive of either a free car inspection or a discounted breakdown cover.

Deferred purchase plans: A few banks and retailers offer deferred purchase plans that enable you to defer/ postpone a particular percentage of the car's price till the loan term expires. Usually, a borrower can defer 30%-60% of the car's price. The borrower needs to repay the loan (along with the interest) over the loan period and then pay the outstanding balance at the end of the loan period.

Personal contract purchase plan: This financing option is offered by the car dealers. A borrower needs to a deposit of 10% - 20% up front. The dealer decides a minimum guaranteed future value (MGFV) against the purchase price of the car. The MGFV is that value of the car when the contract ends as long as the driver has not overshot the set mileage limits. As the MGFV is taken off from the purchase price of the car, the monthly repayments are usually quite low.

Hire purchase: This type of financing option is offered mainly by the car dealers. A borrower needs to deposit about 10%-15% of the purchase price of the car. Rest of the amount can be repaid through fixed, monthly payments over a period of 1 - 5 years. The loan amount is secured against the car. So, the borrower owns the car only after he/she has repaid the loan amount completely.