Car finance can be really beneficial for many people with different circumstances. Nowadays, the car finance industry is more accessible for people who would of usually been declined straight away. Car loans enable people to spread the cost of owning a new or used car and pay it off in affordable monthly payments. Car loans will also require you to pay interest to the lender, which can be determined by your credit score and affordability. With this in mind and the rise of car finance in the UK, what are some of the common misconceptions around car finance?
You can only get car finance with good credit
It can help to have a good credit score when applying for car finance. You can benefit from lower interest rates which means you will pay less back in interest over the full period. In some cases, you can also benefit from lower monthly payments too. So, having a better credit score can mean that you can save money on your finance deal.
However, if you are applying for car finance with bad credit, it can be possible to get accepted for finance. Using a bad credit car finance specialist can be beneficial as they don’t just look at your credit file to get you approved but take into account your affordability. If you can prove you can meet the repayment schedule, then it can increase your chances of getting approved.
You can only get car finance from a dealership
Many people think the easiest way to get car finance is at a car dealership. You see the car you want and then get the finance, right? But what if you sorted your finance first? Using a car finance broker and sorting you finance first can save you time and money. You don’t need to apply multiple times for the best deal possible but instead, you just need to apply with a broker once. The broker can then match you up with the most suitable lender from a wide range of finance packages. Brokers work with trusted and reputable lenders and help get the best deal for your circumstances, even if you have bad credit.
You can only get finance on new cars
When car finance first became popular you could only apply for finance on new cars. However, many new cars suffer from high rates of car depreciation within the first year, which can put many buyers off. However, if it’s time to replace your old car and you can’t afford to get a new car or have a low monthly budget, you can also take out finance on many used cars.
You own the car from the start
Depending on the type of car finance agreement you choose, you may not be the automatic owner of the car straight away. For example, a personal loan option can be used to pay for anything, and the total amount gets deposited into your bank account so you can get any car you want where it be from a dealership or private seller. You buy the car outright with the money and then make monthly payments to the loan provider. This means you own the car outright from the start so you’re free to do as many miles as you like, sell it when you’re ready and also make any modifications. If you choose a Hire Purchase car finance deal, then you make monthly payments to an agreed term with added interest and you don’t own the car until the final payment has been made. This also means that if you fail to meet the repayment schedule and repeatedly make late or missed payments, the lender has the right to take the car off you. You should do your research on different types of car finance deals before you decide. The three most popular choices for people in the UK include Personal Contract Purchase, Hire Purchase and a personal loan option.