You’ve found your new car. All you need to do now is find the pennies to pay for it.
The fact is your bank, building society; dealer and even the local supermarket will be falling over backwards to lend you the necessary - the real question is which option is best.

Naturally, cash is king - and cheap. You may have had to save hard, but now you can reap the rewards of having no interest repayments to make.

If that’s a no-go, and unfortunately it is for the majority of us, it’s advisable to sit down and work out a budget. Ask yourself, how much are you able to afford, and comfortably repay, each month and stick to it.

Once you’ve got this figure you can start weighing up the bewildering options available.

First off is the Dealer.

They will often quote you a flat interest rate. Ignore that figure and ask for the APR (Annual Percentage Rate), which includes charges and other costs. Then start to haggle.

It is a little known fact that dealers will reduce this headline number if you push them hard enough. One word of warning though: Never tell them how much you’re able to afford each month as he’ll sell you a finance plan that may fit your repayment, but which might cost you more interest in the long term.

The Next Option is a Personal Loan.

Readily available from banks, supermarkets and even High Street retailers, you borrow a lump sum and agree a repayment term that suits your budget and circumstances. It’s worthwhile using the Internet to find and compare the best deals. Sites like www.moneysupermarket.com are worth a visit.

More and more people are turning to flexible loans called PCPs (Personal Contract Purchases). After paying a small deposit, you make repayments in the same way as a personal loan over a set term usually 2-3 years.

At the end, you have three choices: You can either walk away and give the car back to the lender, use it as a part exchange for another, or make a final, larger, one-off payment called the Minimum Guaranteed Future Value (MGFV) to take ownership. This figure is calculated at the start of the period by the lender and is determined by the length of the repayment period and the number of miles you’re likely to do.

It is easy to get hoodwinked when trying to decipher the myriad of finance packages and lenders all desperately fighting for your business. The trick is to do your research, stick to your budget and don’t get bullied.