A Guide to Buying Cars on Finance

A Guide to Buying Cars on Finance

A Guide to Buying Cars on Finance

Buying cars on finance can be a great way to start driving a brand new car without the initial outlay. This is a brief guide to the aspects you should consider when looking for new cars on finance.

Credit Rating

The first step to ensuring you get the best deal is to check your credit rating. This may contain inaccurate information which will negatively affect the deals available to you. By checking your rating with a credit report provider and correcting these problems before seeking a loan you can ensure they are calculated correctly and offering the best price.

Terms of the Loan

When looking for cars on finance it is important to make sure you are comparing like for like. Simply comparing the rate of APR between deals can be misleading. Be sure to check all aspects of the finance agreement such as monthly repayment, total repayable amount, payment protection insurance, APR and any additional charges which are not included in the APR. This should give you a clear picture of each deal on offer.

Requirements

Often lenders will request some proof of residence such as one or more utility bills. This can also verify to the lender, the duration you have lived in the country. The lender may impose this and other requirements to assess suitability.

Payment Protection Insurance

This service has had some bad press over recent years. The objection is not the service its self but the ability of the lenders to set vastly different prices on the service. Being covered by payment protection insurance means you are covered in the event you should suffer a loss of income. If this is a service you want, comparing loans from different companies for the same amount should give you a frame of reference for the correct amount to pay.

Secured or Unsecured

This is the basis on which the money is lent to you. Very few lenders are willing to provide unsecured loans over 15000. A secured loan involves agreeing some form of collateral with the lender. This will be an asset of equivalent or greater value.

Other Costs

With any loan there may be charges which are not included in the total repayable amount or APR. The most common is a fee for settling the difference early. Also defaulting on the agreement may cause the terms of the loan to change. As long as you are aware of any additional costs you can make an informed decision.

Plan the Purchase

When buying cars on finance, you can get an idea of the required loan amount from the average cost of the make and model you are after. Take your time and find as many lenders as you deem reasonable, this may include the manufacturer. Once you have a frame of reference you can speak to a dealer. The most important thing is to be prepared and only proceed once you are happy with the terms of the deal. If you are unhappy with anything you can always return another day.

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