Many of us require a car to get from A to B more quickly – but purchasing a vehicle outright can be tricky. This is where car finance comes in. With a range of options to suit you, and even car finance bad credit options, you can pay for your car in more affordable and manageable monthly payments. And navigating this type of finance is made simple and rewarding with the help of a reputable dealership or lender. We’ll take a closer look at a few factors to consider to make applying for car finance quick and easy.
The benefits of car finance
When deciding whether car finance is right for you, it helps to know more about the benefits so you can make an informed decision. There are a few reasons why car finance is one of the most popular ways to obtain a car, such as:
Affordable and flexible payments: Finance allows you to spread the cost of the car over a longer period of time, so you can pay a smaller sum to suit your budget, which allows you to manage payments more easily.
Access to a wide range of vehicles: If you’re looking to own a new car, or one of the latest models, paying for it outright may not be an option. Choosing car finance means access to top-of-the-range models at a more affordable price.
Simplified process: Car finance simplifies the car-buying process. Lenders and dealerships will help you throughout, allowing you to discover the options available to you. They will complete a lot of the application on your behalf, so you don’t have to worry.
Understanding car finance options
If you’ve considered the above benefits and decided that you’d like to proceed, the next step is to consider the option that suits you best. Here are a few of the most popular types of car finance:
- Personal loans: A personal car loan will allow you the funds to pay for a car outright. You’ll then have to pay back the loan over an agreed time with added interest. However, to be approved, you may need a good credit score.
- Hire Purchase: You’ll typically be asked to put a deposit down towards your hire purchase. You’ll then pay agreed monthly payments towards the cost of the car. You won’t own the vehicle until the last payment is made.
- PCP: Like a hire purchase, you may be asked to put a deposit down towards your vehicle. You will then borrow the rest and make monthly payments to cover interest and the cost of depreciation. At the end of this agreement, you can buy the car outright, trade it in, or return it.
Making an informed decision
Car finance is a simple way to purchase a vehicle when you don’t have the full sum required. To ensure that you’re getting a rewarding deal, it’s important to consider a few points, which we’ll take a closer look at below.
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Consider budget
Firstly, you need to consider your budget to help you narrow down your options. Make sure you calculate how much you can afford to spend on your car each month, whether that’s in terms of finance payments, insurance, petrol, and any potential repairs you may need. This will help you decide how much you can afford to spend on car finance.
Maintaining a good credit score
To improve your chances of being approved for the car finance option of your choice, ensure you do all you can to improve and maintain your credit score before you apply. Whilst there are bad credit car loans available, improving your score shows lenders you are creditworthy, therefore allowing you to take advantage of some of the best rates.
Saving for a deposit
The amount you pay in finance towards your car each week can be made to feel more rewarding if you save for a deposit. Most finance options will require a small deposit, showing lenders you’re willing to put your own money down on the vehicle and a trustworthy borrower. It can also decrease the amount you pay each month, so consider saving for a deposit before you enter an agreement.
Comparing lenders
To ensure you’re benefiting from a simple and rewarding process, comparing lenders is essential. As mentioned above, many lenders and car dealerships will help you complete the application process, making it quick and presenting it in an understandable way. When choosing a lender, ensure you take a look at the interest rates they’re offering, as well as any additional fees so you can get the best deal. Consider the customer service they offer too, as this will make a huge difference throughout the application process.
