Anyway, let’s look at business options. With contract hire, you lease a new vehicle (finance is arranged through a specialist third party) for a fixed monthly fee which often has the option of including maintenance costs. An annual mileage is agreed. At the end of the contract, the car goes back to the showroom and you walk away with nothing but three years of hassle-free motoring, plus the benefit of tax and VAT advantages. Personal contract hire works in exactly the same way, but is designed for the individual rather than a business.

Contract purchase takes the process a step further, as you have the option to keep the vehicle at the end of the agreement. At the end of the contract, you can return the car, extend the agreement or pay a final fee to keep the vehicle. It’s worth knowing that if you have repaid more than half the debt, you have the right to return the motor. This can be handy to know if your circumstances change or you feel you’re paying well over the odds. Personal contract purchase works in exactly the same way.

Of course, there are all sorts of costs to consider: a deposit; payment in advance for the first instalment; administration costs; and the usual registration fees. And when your car’s time is up, it’s assessed upon its return and you’re charged for excess mileage or damage. A final ‘disposition’ fee may also apply if you don’t keep the car.

Regardless of the method you choose, the advantages are that you always have a new or nearly new car; there should be no unexpected costs; monthly outgoings can be cheaper than a loan; and you don’t have to dispose of the vehicle yourself when you want a replacement.

You pay a lot a month for something you may not even own at the end of the contract. For many, a simpler solution is to take out straightforward finance, and remember you’re not obliged to take the franchised dealer’s offer. Shop around to find the most suitable arrangement.