Everyone dream of owning a new car, but the scarcity of finance often leaves this dream unfulfilled. However, that should not be destined! You can still change your fate and make your dream a reality using a car finance facility. Find some necessary facts that can help you decide whether this provision is the right car-buying option for you.
Instant Car Finance – Defining the Plan
Car finance is a loan mechanism that you can precisely use to buy a new car (and sometimes used cars too). With the loan secured against the car, you tend to pay off the car price in small monthly instalments. This means you don’t have to exhaust your savings and payout a huge amount at one instance.
The provision of instant car finance approval is especially beneficial for those who are struggling with the huge down payment. As you opt-in for the loan, your down payment for the car shrinks into a minimal amount, thereby, reducing your burden to a great extent.
Wondering how car financing works? The next segment brings to you the approval procedure of car financing or hire purchase, as you may say.
Here’s how car financing works
Down payment is an inevitable part of car buying, which reduces essentially as you are opt-in for car financing. You have to pay only 10% off the vehicle’s value as a down payment when buying with a secured loan in most situations. You can pay off the remaining cost of the car’s value in specific monthly instalments from 12 to 60 months (1-5 years).
While you are buying a car, hire purchase is often arranged by the car dealers. But if you want to deal with it on your own, which is better, you can directly consult a private lender. The online direct creditors can further assist you with the car financing terms, interest rates, and other details.
For new cars, the interest rates are typically high and competitive. But for second-hand vehicles, the rates range between 4%-8%. Sometimes, lenders ask for higher interest rates if your credit score is poor. However, that varies from lenders to lenders.
Make sure to choose your lender after discussing all these matters in detail. There’s another thing that you must know about car financing — the car becomes in your name only when you pay an ‘option to purchase fee’ after finishing with the monthly instalments. However, it is a minimal amount compared to the instalments, typically £100 – £200.
Now that you know how car financing works, you need to be acquainted with the benefits of car financing. Find out the pros under the next subhead.
Reasons to opt-in for car financing – benefits explained
Car financing brings in a lot of advantages for those who are planning to own a new vehicle. Some of the many benefits are mentioned below –
- Flexible repayment terms, which may vary between 1 to 5 years. It means you don’t have to pay a lump sum amount in any month. The entire cost of the vehicle, excluding the down payment, is distributed in equated monthly payoffs.
- Down payment is relatively low (usually 10% of the vehicle cost).
- Fixed interest rates make it a better car-buying option. Also, you get a clear idea about the exact amount to be paid every month throughout the term.
- Once you pay half of the car cost in instalments, you can halt the further payments and claim a return. It’s one probable option that comes with car financing.
- You can always go for bad credit car finance instant decision. It means if you have a poor credit rating, it will be easier for you to secure car financing than availing of unsecured loans. It is because the creditors use your car as collateral in case of car financing.
- This type of loan never comes with mileage restrictions.
- Unlike Personal Contract Purchase (PCP), you don’t have to find a large sum while buying your vehicle with car financing.
With these courtesies available at no extra charge, it is always better to opt-in for car financing. Just make sure you are in talks with a trusted and genuine creditor.
How to secure the best car financing deal?
There are two distinct provisions when you decide on car financing. The options are –
- Getting the finance through the car dealer from whom you will be buying the vehicle
- Getting finance through a web-based direct lender without a credit check
It’s wiser and useful to search the internet first as you can come up with varied options. With the numbers in your hand, you can haggle within dealerships. Offers from online lenders can vary significantly. That’s why it is essential to get more than one quote. Here are a few aspects on which you’ll compare –
- The Annual Percentage Rate (APR) that you’ve to pay
- The total repayment amount
- The overall cost of the credit
- Any additional or hidden fees
With such information, it will be more feasible for you to decide on the car financing lender. Also, the comparison can help you come across a genuine name, which is the best among the creditors.
