If you’ve never taken out car finance before or you’ve previously been burnt by a dodgy deal, you may be wondering if car finance is for you. Getting your next car is a big decision and it’s important to be informed of all the benefits and how car finance works before you apply. So, why should you choose to finance your next car?
1. Spread the cost
The main benefit of getting your next car on finance is the ability to spread the cost into affordable monthly payments. With most car finance deals you will make monthly payments with added interest till the end of your agreed term. It also usually means that you can get a better car for your budget. Car finance means you don’t have to settle for an older car with thousands of miles and can give you access to both new and used cars.
2. Flexible safe and secure
There are many different types of car finance deals, and they can be more suited to other. Having flexible options to choose your loan amount, loan term and monthly payments means that you can get a deal that’s affordable for you. Choosing reputable and trusted lenders also makes car finance safe and secure.
3. You don’t need a deposit
In the past, car finance agreements such as Hire Purchase or Personal Contract Purchase required a deposit. Nowadays, there are many no deposit car finance deals available. This can be really handy if you need a car quickly and don’t have a deposit to hand. No deposit car finance options are available on Hire Purchase and PCP finance deals.
4. You can get approved for car finance with bad credit
Having a good credit score can increase your chances of getting approved for finance and means you benefit from better rates. However, there are also many affordable options for bad credit car finance. Lenders are using a mixture of credit worthiness and also affordability to help get you approved for finance if you have bad credit. If you do want to get the best deal possible it is worth increasing your credit score before you start applying for finance.
5. Use car finance to build your credit score
Many people who have a bad credit rating may take a higher interest rate than they first wanted. However, having car finance, making regular monthly payments, and never missing any deadlines, can help to increase your credit score. You can then refinance your current deal when you’re halfway through your agreement and use your better credit score to get offered a better finance deal.
6. Part exchange your old car
You can use the value of your existing car as a deposit for your next car and you can part exchange your current car even if it has existing finance. This helps you save time and money and also the hassle of selling your old car. As long as your current car on finance is worth more than your settlement figure, you can use the value as a deposit towards another car.
7. Change your car more frequently
Car finance agreements such as Personal Contract Purchase are designed to allow drivers to change their car more frequently. Within a PCP deal, monthly payments are usually lower as you aren’t paying off the total cost of the car. After a couple of yours, you are able to use the value of your current car to start a new PCP deal on another car.
8. Hold on to your savings
Having a healthy savings account is a great financial habit to get into. Instead of splashing all your savings on a new care, you can protect your savings account and opt for car finance. This can be really beneficial for any unexpected accidents or repairs.