Hybrid Car Finance: What Should I Know?
Are you thinking of buying a hybrid car? You might even have a few models in mind already. 🚘 Despite the rise in popularity of electric vehicles, hybrid cars are still in demand, and there are plenty of makes and models to consider, including the famous Toyota Prius.
If the idea of buying a hybrid gets your engine running, you'll need a way to purchase it. For many, the answer lies in hybrid car finance so here we have everything you need to know about buying a hybrid vehicle with car finance.
But First ... What Are Hybrid Cars?
Just in case this is something that has escaped your notice, a hybrid car is a cross between a traditional fuel vehicle and an electric car. Essentially, it gives you the best of both worlds, using a gasoline engine with an electric motor to provide power. This results in improved fuel efficiency and lower carbon dioxide emissions compared to conventional petrol or diesel cars.
Why Should I Buy a Hybrid Car on Finance?
Purchasing a hybrid car on finance allows you to enjoy the benefits of fuel efficiency and lower emissions without the hefty upfront cost of buying a vehicle. Flexible repayment options can make owning an eco-friendly hybrid vehicle more affordable and accessible. You're doing your bit for the environment with an environmentally-friendly car without feeling the strain on your bank account.
Which Hybrid Car Finance Options Are Available?
So you've found a hybrid option that you love. All that's left to do now is find the right finance. There are several ways you can finance a hybrid car, including hire purchase (HP), personal contract purchase (PCP), a lease or subscription, or a loan.
Can I Get a Hybrid Car On Finance With HP?
If you select a hire purchase car finance agreement, you can get the hybrid car you want without paying the full price in one go. Instead, the cost of the vehicle is spread out over a certain period, and you only have to think about the amount due every month. At the end of your contract, the car is yours.
To make the monthly repayment amount even more affordable, you can pay a larger deposit. The bigger your deposit, the smaller the monthly repayment amount since you’ll borrow less rom the lender. Also, if you choose a shorter loan period, it means you’ll pay less interest as well (although the monthly payments are higher). As a result, the car will be yours faster.
Are PCP Deals Available for Hybrid Cars?
Consider financing your car with PCP if you want a similar option to hire purchase but also have the option to make a balloon payment. It works much in the same way as a HP, only you have the option of making a balloon payment at the end of the contract to buy the car outright. The balloon payment means you pay less monthly, and there's no obligation to purchase the car in full. Instead, you can simply hand the keys back to the dealer.
Personal contract hire usually requires you to borrow from the dealership directly. Hire purchase agreements, on the other hand, can be from the dealer or a car finance company. It's also worth bearing in mind that both of these options have limitations. For example, you can't modify the car in any way, and there may be annual mileage caps, with extra charges if you go over the allocated amount.
Can I Lease a Hybrid Car?
For anyone who isn't desperate to own their car outright a lease or subscription could work in your favour. With a lease, you pay a deposit and then make the agreed monthly payments over a set period, handing the keys back once the agreement has finished. Alternatively, you can opt for a subscription service, which typically involves a lower deposit amount and includes aspects like maintenance and servicing.
Can I Use a Personal Loan to Get a Hybrid Car on Finance?
Should you wish to buy your car outright but don't want to spend all of your hard-earned money, a loan might be the best option. This involves either going to a bank or using a specialist lender like Carmoola (more on us in a bit). You can borrow the funds for the car, buying it outright from the dealer while paying back the lender. With a personal loan, you're free to make modifications to the car, and there are no mileage caps.
What Should I Consider When Choosing a Finance Option?
When deciding on a finance option for your hybrid car, there are several factors you need to consider. These include:
1. Personal Budget
Your monthly budget is a key factor in choosing a finance option. Each type of finance has different monthly costs, so you need to ensure your choice fits comfortably within your budget without causing financial strain.
2. Duration of Car Ownership
Consider how long you plan to keep the car. If you enjoy changing cars every few years, a lease or PCP might be the best option. If you want to keep the car for a longer period, a hire purchase or loan could be more suitable.
Again, some finance options, like leases and PCP deals, often have annual mileage limits. If you drive a lot, these options could end up costing more in the long run due to excess mileage charges.
4. Future Value
Remember that cars depreciate over time. If you choose a finance option where you own the car at the end (like a loan or HP), consider the car's expected future value.
5. Credit Score
Your credit score can affect the interest rates available to you. Those with higher scores often qualify for lower rates.
Avoid these potential pitfalls when financing a car:
1. Over-Stretching Your Budget
It's easy to be tempted by a higher-spec car, but stretching your budget too thin can lead to financial hardship down the line. Make sure you're comfortable with the repayments before deciding on a hybrid car finance option.
2. Ignoring the Total Cost
Don't just on the monthly payment; also consider the total cost of the finance deal, including interest and fees. This way, you'll have a better idea of the total costs involved with financing a hybrid vehicle.
3. Overlooking the Fine Print
Always read the terms and conditions. Look out for things like early repayment charges, mileage limits and what happens at the end of the agreement.
4. Forgetting Insurance and Maintenance Costs
These are additional costs to consider. Some finance agreements may include maintenance packages, while others don't. And remember that you'll need to insure the car.
Remember, the best finance option for you depends on your individual circumstances. Always do your research and consider seeking financial advice if needed.
Hybrid Car Finance
Hybrid car finance is a great option for car buyers who want to buy an eco-friendly car without using up all of their savings in one big purchase. If you're ready to buy your hybrid car, check use car finance calculator to help define your budget and get you ready for a hybrid adventure. 👍