Buying a car is a major decision for an individual or family. For most people it is the second most expensive purchase that they will make in their life. Despite the importance of the purchase many will choose to fund the vehicle in a manner that is not the most suitable for them simply because they do not fully understand their options.
Most people spend three months doing research before buying a car, but few spend anywhere near this time making sure that they get the right loan. Since the loan will often run for 2 – 5 years, it is surprising to discover that many people don’t even consider the importance of finding the best finance deal to suit their needs. You are advised to read through our Questions and Answers section to make yourself familiar with various aspects of buying a car.
Car finance is a vital for many people as often they can not afford to buy a car outright without some sort of financial help. Using car finance can also help people to afford the car that they desire, rather than what they can afford to buy there and then. Car finance is a flexible loan option which can be arranged for those who have been refused credit elsewhere and also for those who have a bad credit rating. A poor credit rating can mean that personal loans will be refused or the APR offered results in the prospective deal being too expensive for the driver.
Hire Purchase (HP) is the most popular method of financing for cars. Dealers are often very keen to try and arrange this type of deal as they can offer it directly through their dealerships. They can’t always offer the best deal though as often they will only have a limited number of lenders available. This is why using a car finance broker may be beneficial. They usually have a larger number of lenders who should be able to get you the best possible deal on your car finance application.
Hire Purchase is a loan that is secured against the value of the vehicle. The loan repayments are made in monthly installments according to the terms of the contract. As the finance is secured against the vehicle, people with weaker credit scores may still be able to qualify for finance because there is less risk for the lender.
It is possible to get very good loan rates but they will depend on your credit rating. Generally if you have a good credit rating you should be able to get between 7% – 12% APR, average credit ratings will be between 12% – 25% APR and poor credit rating may be between 25 % – 40% APR. These rates are highly competitive when compared to most other loan formats including personal loans.
Contract plans (Car Leasing) is another form of finance that is worth considering. With this type of arrangement a deposit is paid by the individual, this is then followed by set monthly payments. When the agreed period finishes the customer may have the option to pay the remaining balance, or switch to a new deal. This will depend on the original agreement type. There are some major benefits for drivers who chose a car leasing plan. These benefits include the ability to get a brand new car every few years, not having to worry about depreciation and they will be able to obtain a car which would have been otherwise unattainable at normal loan repayment levels. Car leasing will require you to have a good credit rating in order to attain the finance and it will require a deposit.
Car Finance Experts will help answer your questions about car finance, giving you honest car finance advice, so you can get the best possible finance for your new car.
