A New Car Before Christmas? What Are Your Options?

Now it is a freezing winter, the last thing you want to be doing is going out looking for cars. You're trying to save as much money as possible to ensure that everyone has a great Christmas and it's more appealing to stay indoors when you're not at work.

However, some people can not get around the fact that they need a new car for whatever reason and the truth is, the winter months leading up to Christmas are in fact a great time to buy a car (with everyone saving for Christmas, car dealerships very often see a drop in sales and so to entice buyers in, they can seem to be giving their cars away).

If you have not got a substantial amount of money to spare for a car, does that mean you can not get one?

Thankfully, no and the following four options all must be considered to ensure you can get the car that you want.

1. Determine whether you actually need a car – the first option that you should look at is how much you actually need a new car, as there's a distinct difference between needing a car and wanting one and the answer could mean you can put off getting a car until the new year.

2. Use car finance – 80% of people buy their new car using car finance. This is because the problem that a lot of people have when looking to buy a car is that they can not afford to pay for the car outright when they need it. However, it's particularly that they can afford to pay out a certain amount of money each month and therefore if this is the case, it's advised you consider the possibility of one of the different types of car finance.

Asking you to buy the car you want, putting down just a small deposit and then paying for the remaining cost over a number of months (usually up to 60 months) is an attractive option as it means that you can get a car immediately without having the full funds available. The three most popular forms of car finance are:

• Car leasing – this was used by 57% of all new car buyers for the first 6 months of this year. There are two main types of car leasing (personal contract hire or personal contract purchase (PCP)). Personal contract hire is where you pay a flat monthly fee (generally much cheaper than the amount you would pay for a car loan (as much as 60% cheaper) for an agreed period after which you hand the car back. but you have the option of buying the car at the end of the agreement.

The advantages of car leasing using PCP is that with personal contract purchase you can drive a new and often prestigious vehicle with a small upfront payment (typically 3 months) and most often it is significantly less each month (as much as 60%) than you would need to spend on a loan or 'hire purchase' (you get a 'bigger bang for your buck'). With PCP you are also exposed to less financial risk, as the contract that you sign is for a monthly payment across a lease contract term of 2, 3 or 4 years – not the cost of the entire car and the final purchase is optional. There is a smaller initial deposit payment required than for Hire Purchase or a loan, normally equivalent to three months payments, followed by 35 more for a three year contract. With PCP you do not need to arrange or negotiate to sell your existing PCP car when you want a new car; With PCP depreciation does not affect your investment in a car but rather the investment by the finance company from what you are leasing.

• Hire Purchase – this is simply where you borrow the money for the entire cost of the vehicle and then this is spread across each month of the contract and has interest added on top. You will not own the car until you have made the final payment. If you default on making the monthly payments, you will lose the car.

• Personal loan – this is like hire purchase, but more often it is more expensive, and the price of the car is spread across the term with interest added on top. The difference is that you will own the car and it will be in your name. If you default on paying your monthly payment, the bank will come after you personally until you repay the money you have borrowed. If you can not, then you could be made bankrupt.