The way in which you finance your vehicle purchase can often effect the choices for your Gap Insurance cover. It makes some sense then to leave our immediate realm of Vehicle Replacement Insurance and consider the choices you may face for proving funding for your vehicle.
Car Finance and your choices
When you walk into a car showroom, there are a number fo choices for you in terms of funding packages for your purchase. Some people are in the fortunate position of being able to pay cash for their new car, but in the majority of cases there is a form of finance involved with the purchase.
Many businesses choose to look at leasing the vehicle, and therefore simply paying a rentla over a fixed term. This means they will never have an opportunity to own the vehicle, however, this may allow for easier budgeting and tax benefits for the user.
Simple Hire Purchase agreements have been around for many years, where you borrow a sum over a fixed period, pay all instalments over a period, and the vehicle is yours at then end of the term.
Another form of Hire Purchase is the Personal Contract Purchase, or PCP agreement. This is simply HP with a deferred payment, or Guaranteed Future Value at the end. This type of finance agreement is extremely popular for both motor dealer and vehicle purchasers.
Which form of finance is the best for a car?
As always there is plenty to consider when looking at funding your vehicle purchase, but going on my own personal experience. funding my Citroen by a PCP agreement was easy and cost-effective when compared to others. The added fact that the interest rate was subsidised by the manufacturer meant I could fund the vehicle very cheaply indeed.
Lots to consider, hope it all helps if you are looking to finance your next vehicle.