If you are looking to buy a new car, there is a very good chance you are also looking for the finance necessary for the purchase.

You might think there is little need to give the question of car finance more than a second thought, since any dealer or garage is certain to offer some form of finance package from the moment you express any interest in buying – after all, by offering you the finance, the dealer stands a greater chance of concluding the sale and there is also a handsome commission to be made from the provision of the finance itself.

But is this really the best source of the finance you need to purchase your car? Here are some car finance tips which suggest that you have other options too:

Finance to suit you

• entering an arrangement for the purchase of a car involves a relatively long-term commitment – so you need to be comfortable that you are going to be able to afford the repayments on your borrowing not just now, but also several years down the line;

• these days, there is a huge range of financing options available, so it is important to choose the one which suits your individual needs and circumstances and with which you feel comfortable;

Dealer finance

• the Consumers’ Association’s Which? magazine identifies those finance packages you are most likely to be offered by any dealer;

• these include hire purchase, Personal Contract Purchase (PCP) and Personal Contract Hire (PCH);

• not only is the cost of borrowing going to be different for each of these finance solutions, but the stage at which you own the car you are buying also differs – and may involve the simple lease of the vehicle rather than its eventual ownership;

• dealers may also offer so-called zero % finance deals which might at first sight appear attractive – but you need to consider just how this affects the purchase price (there is unlikely to be any room for negotiating a better price) and be prepared to have to find a much bigger deposit (of, say, 35% rather than the more typical 10%);

Independent finance

• if you are going to accept the finance deal offered by a dealer, of course, you are restricted to that dealer for buying your car;

• so that you have the choice of buying your car wherever you choose, therefore, you might prefer to arrange the necessary finance entirely independently;

• in that case, you might want to arrange a personal loan from your bank, building society of other lender – the rate of interest is typically quite high, but you may borrow sufficient funds to buy your car outright, without the need for a deposit;

• still more expensive is the option of using your credit card to finance the purchase of the car – but credit cards attract notoriously high rates of interest;

• if you have a mortgage, you may be able to extend the borrowing to cover the purchase of your car – but beware that your home may be at risk if you default on the repayments;

Independent brokers

• with such a wide range of financing options available, it might be difficult deciding on the one that suits your particular needs and circumstances – at a competitive price;

• this is just where an independent car finance broker is able to help;

• such an independent broker is free to act entirely on your behalf to find the most suitable and competitively priced financing arrangements to suit your needs.

Car finance is relatively plentiful and easy to arrange, but you need to be able to choose the one that suits you and the deal that offers a competitive rate.