We are taking a look at 10 of the most frequently asked questions about car finance, according to Google’s latest search trends report:
1. Does car finance affect a mortgage?
All loans, debts and general financial products can leave a mark on your credit report. Whether this mark is positive or negative depends on the type of product you apply for, and whether your application is successful. If concerned about your credit score or how applying for car finance could affect a future mortgage application, consult with an independent broker for advice.
2. Can I sell a car on finance?
Generally speaking, you cannot sell a car purchased on finance until you have repaid your debt and taken legal ownership of the car; something that applies in the case of an HP or PCP deal. A car purchased by way of a personal loan can however, be sold at any time.
3. What’s the best way to finance a car?
It depends entirely on your preferences, your requirements and your budget. Some options combine bigger initial deposits with lower monthly repayments, while others offer lower rates of interest for prompt repayment. Your broker will help you determine the best option for you, in accordance with your budget and whether you want to take ownership of the car at the end of the agreed term.
4. What are the different types of car finance?
The main types of car finance are hire purchase or HP and personal contract purchase or PCP. Both of which involve an initial deposit, followed by a series of monthly payments over the course of several years. The difference is that with PCP, you do not automatically become the owner of the vehicle at the end of the agreed term. You can make a ‘balloon payment’ to take ownership of the car, or pass it back to the provider.
5. Can you swap finance from one car to another?
Sadly not, as car finance deals are tailored in accordance with the requirements of the customer and the vehicle they are looking to finance. It is therefore impossible to swap finance from one car to another, but there is always the option of exiting a finance agreement early (though penalty fees may be payable).
6. How does car finance work?
Car finance provides customers with the opportunity to spread the costs of buying a car over a series of monthly repayments. A deposit of 10% (sometimes 20%) is payable, after which the agreed monthly payment is made until the debt is cleared.
7. Can I get car finance with an IVA?
Yes – issues like IVAs, a history of bankruptcy and poor credit need not prevent you from qualifying for car finance. However, broker support is essential when looking for a ‘subprime’ car finance deal, as most major lenders will not offer their services to such applicants.
8. Can I get car finance with no deposit?
Yes – many car finance specialists offer deals with no deposit payable. Comparing the market with the help of an established broker will help you find the best deal, in accordance with your budget and preferences. However, paying an initial deposit could pave the way for a lower rate of interest on your loan.
9. Can I get bad credit card finance?
Yes – many car finance companies are willing to offer their services to poor credit applicants. If you have concerns over your credit score or your financial history in general, be sure to discuss them with your broker before applying for car finance.
10. What is the cheapest way to finance a car?
Paying the largest possible deposit and repaying your debt short-term holds the key to getting the best possible deal. Borrowing costs and car finance are influenced by several factors, including the length of the agreement, the financial status of the applicant, the size of the loan and more. Your broker will help you find the best possible deal from a top-rated lender you can trust.
For more information on any of the above or to get your car finance application underway, contact the team at UK Car Finance for an obligation-free consultation.