Is car finance the way to go now?

[TazLondon]

So after three years I'll be taking a test drive of a new car tomorrow. In those three years the market has changed entirely from buying a car to leasing a car (HP or PCP). I remember car adverts three years ago were mostly showing the price of a car and then you could ask for a PCP/HP quote.

Nowadays, all adverts lead with finance.

I've only ever purchased my cars - usually cash + p/x + bank loan.

However, car prices have risen dramatically in recent years - sometimes in excess of 25%. I guess this is to put people off buying a brand new car outright and force people down the finance route.

Is this the way to go now? I guess the salesman will push me towards finance.

[TazLondon]

There's one thing that confuses me about finance and that is the GFV.

Is this known as the balloon payment that you pay at the end of the term to keep the car?

I also see stuff about using the car to fund the deposit on a new car after the term. How does this work? Just as an example, if the balloon payment was £15K, then how would that fund a deposit on a new car?

I'm just doing some sums at the moment to see if it's better to go down the finance route as I almost always change cars at 3 years old at the very latest.

[TazLondon]

Okay, thanks guys. Understood.