WATCH: What are your options when financing a car?

There are four common methods of financing a car. The clip above explores the differences between them.

1 Personal Contract Purchase (PCP):

This allows you to purchase your vehicle paying a deposit and a series of monthly payments. In the end of this agreement, you have an option to buy the car for a final 'balloon' payment.

2 Hire Purchase (HP):

An HP agreement is where you put down a deposit for the vehicle and the finance firm lends you the rest. There will be no final payment in the end once finance firm is paid off and the car then becomes yours.

3 Leasing (Personal Contract Hire):

Leasing a car, is like taking out a long-term car rental with mileage limits; once the payment term ends, there is no option to purchase the car via final payment.

4 Bank Loan:

A regular loan could make getting the keys to a brand new car a little easier. You will own the car from the start and can sell it and buy something else if you wish.