Around half of new car purchases are at least partly funded by a loan, because few people have such a large chunk of money sitting around doing nothing. Even if you have got a large sum of money available, you may be better off taking out a loan if you can track down a zero per cent finance rate. Whichever option you take, you have to so the sums to see which way will leave you better off in the long term - but remember you need to take into account all the charges if you're to do this effectively.

• The most popular way of paying for a new car, with a huge variety of lenders offering personal loans - so shop around for the best deals.
  
• You choose how long you take to repay the loan and there are no restrictions on the type of car you buy or how many miles you cover - you also don't need a hefty deposit up front.
  
• The car will also be yours from day one, but if you take out a secured loan, bear in mind you could lose your home if you don't keep up repayments - and lenders are very choosy.
  
• Often, the more you borrow, the better the interest rate you'll be offered. But you've still got to pay the money back (with interest), so don't get carried away by just looking at your monthly outgoings.
  
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