Many people are still under the misconception that the best way to pay for your next car is to use cash. Whilst it can be beneficial and cost-effective car finance should not be overlooked! Car finance is a great way to spread the cost of owning your next car. There are many advantages to getting a car loan to cover your payments and it can even help to increase your credit score! If you’ve never taken out finance before or a previous deal has left a bad taste in your mouth, find out how car finance can work for you!
Spread the cost
One of the main benefits of car finance is the ability to spread the cost. The cost of your chosen car is broken down into affordable monthly payments with added interest. UK car finance agreements such as Hire Purchase have fixed monthly payments and interest rates so there’s no scary surprises! You can set your finance budget and contract length, so you know exactly what you’re paying and for how long!
Get a better car than you first thought
Spreading the cost of a car can mean that you can get a better car than maybe you had first budgeted for. Using cash to get a car can be expensive but car finance makes it affordable! If you had a used car in mind, you may also be able to get a new car within your budget! Some finance deals only cover part of the car cost so you could benefit from low monthly payments on a newer car!
Quick and easy
Car finance should not be overlooked as a quick and easy way to get a car. Many people think hat car finance is slow and takes a while to sort, but you can get approved and find a car the same day in some cases! If you need a car in a hurry and don’t have the savings to hand, you can also sort a no deposit car finance deal with no upfront payment! If you already have a car, you can use it as a deposit towards your car finance too. The dealer can take your old car and send you on your way in your new car!
Build your credit score
It may seem counteractive but if you have bad credit, buying a car on finance can help your credit score! You can use your car finance deal to increase your credit score by making your repayments each month. Making payments on time and in full shows potential future lenders that you are trusted to pay back your loan. If you have bad credit and received a higher interest rate than you first thought, you can choose to refinance halfway through and could be offered a lower interest rate.
Flexible finance options
In the UK, there are 3 main types of finance that are most popular. These include a personal loan option, hire purchase agreement and personal contract purchase option. Each option is suited to some people rather than others, but it depends on what you want from your finance deal. If you want lower monthly payments and want to change your car more regularly, a Personal Contract purchase may the one for you! However, if you want a car finance deal with no milage limits or damage charges, you may want to consider a hire purchase car finance agreement instead! You should research all finance options before committing to one. Always remember that guaranteed car finance isn’t a thing and you will have to usually have a decent credit score and good affordability before getting approved.
