If you’re thinking about buying a car, you’ve a few things to consider. Not least, how you’re going to finance the purchase. The most cost-effective option is to buy the vehicle outright with cash – that way you don’t have any interest charges to worry about.

But not everybody has enough spare cash lying about to be able to cover the price of a car. If that’s the case, you may have to weigh up whether to take out a personal loan, or to buy the car on finance. In this article, we talk you through some of the things you should consider before you make your decision.

Buying a car with a personal loan could make the purchase more straightforward

To buy a car with a personal loan, you first have to approach your bank, or another financial institution to lend you the money. Once you’ve got the money, you can effectively buy the car with cash. This means the only things you really have to negotiate with the car dealer is the price of the car itself. It makes the purchase a bit more straightforward.

You won’t have to pay a deposit or watch your mileage

When you buy a car on finance, you’ll probably have to put down a deposit first. There are often restrictions placed on how many miles you can drive in the car each year, too. This is because the car is technically still owned by the finance company, until you have made your last payment on the finance agreement. That’s not the case when using a personal loan to buy a car because you basically just borrow as much money as you need to buy the car outright.

You may get a lower interest rate with a personal loan

Whether you take out personal loan, or choose finance to buy a car, you’ll have to pay interest on the money you borrow. The amount of interest you pay depends on a number of factors, including your credit rating and personal circumstances.

Don’t just look at the interest rate, look at how much you’ll repay overall

When you borrow money, whether it’s a loan or car finance, there are 3 things you should look at carefully: the interest rate, the amount you have to repay each month, and the length of time you have to repay the debt. Some people choose to repay the loan over a longer period of time because this keeps their monthly repayments lower and more affordable. But keep in mind that the longer it takes you to repay the money, the more interest you may get charged overall. So, you might decide instead to pay more back each month, so that you repay the debt sooner. A good rule of thumb is to look at the amount you’ll have to repay overall, so you understand how much the loan will cost you in total.

If you’re a customer of the Police family, you can get access to a Salary Finance loan.

We’ve partnered up with Salary Finance to offer personal loans to the Police Family*. You can apply today for a loan that you pay back by a fixed monthly direct debit.

You’re eligible for a Salary Finance loan if you:

• Are a Serving or Retired Officer, Police Staff, PCSO, Special Constable or a family member
• Are over 18 years old
• Have an income over £6,000 before tax
• Have lived in the UK for at least 3 years

Loans are not currently available for PSNI customer and their families.

Important things you need to know

Applications will be assessed to ensure the loan is appropriate and affordable for you.

Salary Finance is a trading style of Salary Finance Limited.

PMGI Limited, trading as Police Mutual, is acting as credit broker for Salary Finance Limited. Salary Finance Limited acts as credit broker exclusively for associated company Salary Finance Loans Limited, which is acting as lender for the purposes of entering into a consumer credit agreement.

You can find out more and apply for a Salary Finance loan here.

PMGI Limited is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 1073408. Registered office: Alexandra House, Queen Street, Lichfield, Staffordshire WS13 6QS. Financial Services Register No. 114942.

Salary Finance Limited and Salary Finance Loans Limited are authorised and regulated by the Financial Conduct Authority (firm reference numbers: 758053 and 734585) and are registered in England & Wales (company numbers: 09677777 and 07643748) at One Hammersmith Broadway, London W6 9DL.