There are now more ways than ever to buy a car. Whether you are looking to secure a brand-new model or are after a used car, the options are endless. Car finance is now the most popular way to secure your next vehicle. We’ve put together this guide to walk you through the very best way to get car finance in 2019.
The most common car finance options available today are Personal Contract Purchase, Hire Purchase or a personal loan.
Personal Contract Purchase
Personal Contract Purchase is typically used by car dealerships as it gives the option to hand the car back and upgrade your vehicle. If you wish to keep the car, you are required to pay a large lump sum, referred to as a balloon payment.
Hire Purchase is used by car finance providers such as lender and brokers and is a preferable option if you wish to own the car at the end of the agreement as you will only be required to pay a small admin fee to become the official owner. This is because your monthly repayments have contributed to paying off the cost of the car.
Personal loans are not secured against your vehicle and the interest rates can often be better. However, you don’t have the same level of consumer protection with this option.
When deciding which type of agreement to go for, there are many factors you need to consider. When buying from a car dealership, you’ll be required to use the car finance agreement on a car they sell, you won’t be able to take it elsewhere. Using a broker, lender or getting a personal loan is much better in this sense as you are far less limited in the car you can get.
Car aside, you also need to consider your chances of getting approved for finance or a loan. To get accepted, you must have lived in the UK for at least 3 years, be free from bankruptcy, be at least 18 years old and be able to prove you can afford the finance/loan. However, there are other factors that are deemed important – the biggest of these is your credit score. If you have a poor credit rating, you are best off looking for a provider that specializes in bad credit car finance in order to be given the best chance. These providers work in the sub-prime market and can help ensure you are matched up with the most suitable providers minimize the chances of being declined and protect your credit score.
You also want to consider your affordability, not just what you can manage to pay each month, but also if you can afford a deposit. Deposits are a good way of lowering your monthly repayments, however some providers will require one to secure a vehicle. If like most people you don’t have a lot of money sitting in the bank ready to be used as a down payment, it’s best to seek out a no deposit car finance provider to ensure you won’t be surprised later into the process.
If you looking to refinance your car to secure better terms, then you need to look for a car finance deal that will accommodate this. Typically, you want to get past the half way mark on your current plan before you think of refinancing. This is because before this point you often have a lot of negative equity for the new lender to swallow up and you may find they are either reluctant to do so or you may receive a higher interest rate due to the added risk.
To improve your chances of getting accepted for car finance, you can take steps such as minimizing your credit applications, trying to improve your credit score and increasing your affordability as much as possible.
Article Submitted By Community Writer