A car that you finance offers many advantages. But there are dangers to avoid. Our experts in car repair offer the right advice to make an informed choice. It is crucial to keep in mind that buying a car will be among the 3 most expensive purchases you’ll make, so don’t do it lightly! Be sure to do your investigation into which financing deal will work best for you and the amount you are able to pay every month.
What exactly are Benefits of Car Finance?
The option of financing a car offers many advantages. It makes cars that appear out of range in terms of cost seem less expensive. It is no secret that financing cars can be a great option for a lot of people. In the year 2018, 1.4 million used cars were purchased through finance which was which is an improvement of 8 percent from the year before, which accounted for nearly a fifth the total sales of used cars. So what are the primary advantages?
You can afford to buy a more expensive vehicle
Spreads the cost
Fixed monthly payment
You can drive in a car with a limited budget
It is possible to change your car more frequently
Increases credit score
Deposit contribution for new vehicles
What are the biggest pitfalls that can be a result of Car Finance and How to avoid them?
The problems of financing a car typically due to impulsive decision-making or not knowing the terms of the contract you’re signing. The following scenarios should be carefully considered prior to you sign a loan agreement:
Interest Payments: Similar to nearly every loan that you can get, a car loan will require that you pay for interest on top of the retail price, thereby raising the price of the car over the cost of the vehicle. The rate of interest you pay will be contingent on a variety of variables like your credit score, and the loan provider.
Financial implications: Financing a car can lead you to take more than you’re able to chew. In the showroom of a dealer, it could be difficult to resist the temptation to buy an expensive vehicle than you’re able to manage to. You may justify the larger monthly cost when you are in the middle of the process by choosing to cut down on saving and investing. Therefore, your financial situation could be impacted.
Insurance Terms: If you finance a vehicle you’re likely to purchase a brand-new or used car with an incredibly high value and therefore your insurance premiums could be higher. In addition, your lender could require you to carry more insurance for physical and liability than you would normally ensure the interests of its customers.
Maximum Mileage: The majority of contracts will stipulate a limit on the amount of miles you’re permitted to drive each year, typically between 10 and 30k miles (depending on the agreement).
Can I still qualify for financing with bad credit?
A poor credit score can greatly influence your chances of obtaining any type of loan or financial product. With less credit score tend to be less likely receive affordable rates, and could be denied a loan by a few lenders. However, there are methods of getting credit approval even with low credit scores also called bad credit car finance. There are ways to improve your credit score:
Request a credit report The credit report is a great starting point, since it will reveal in details your credit history, as well as your score overall. It can provide you with an idea of the areas you’re not doing well and the best way to fix it to increase the chances of getting financing. It is possible to get the copy of your credit score for free through Experian, Equifax, or Callcredit.
Register on the Electoral Roll If you’re not yet, you must sign up on your electoral roll. Finance companies will look this up when they conduct credit checks to verify whether your address and name correspond. If you’re on the electoral list It makes it simpler for financial institutions to conduct these checks. The fact that you’re registered doesn’t affect your credit score, however it can help, and it’s simple to complete.
Pay your debts on time It’s easy however, it’s worth making sure that you pay your phone bill each month or make sure you pay off your credit card (if appropriate). Simple steps are the most effective methods to earn the trust of lenders!
Limit your applications to a minimum The more applications you submit more ‘Hard Searches are conducted to your credit rating. In the event that you’ve earned a poor score and often get denied and this impacts your score negatively. First, an eligibility check called a “Soft Search” is a better option than a formal application. Although it can’t be able to tell you for certain whether an organization that offers finance will give you the loan, it can provide you with a reliable idea, and will not show up on your credit report.
Get in touch with the team at motorlend.co.uk when searching for the best car finance deals…
Can I trade-in/part-exchange my car that’s on finance?
An often asked question that we get asked! The answer is that yes you are able to trade in or trade in for a vehicle that is on finance . It does not matter if you have an automobile that is on Hire Purchase (HP) or Personal Contract Purchase (PCP) The process is easy. There are some steps you be required to complete to accomplish this:
Find a settlement amount with your lender.
Find out the worth of your vehicle with any tool for valuation. All you require is the registration number.
After that, it’s time to do little math to subtract the settlement amount from the value of your car. This is equivalent to the equity in your vehicle. If you’ve got a positive number, congratulations! You can utilize the amount to exchange it to purchase a new car. However, if the number has a negative value, then you’ll be required to pay the cash on top of the new car’s cost.