Buying a car is a huge expense that may disturb your monthly financial cycle. If you are planning to buy a car, you can consider the option of getting car finance and fulfil your dream of owning a car.
Of course, there are other options available in the marketplace but this seems more perfect. It is so because of the presence of flexible lending deals. The option of car finance has the availability for the people with poor credit scores or those are unemployed.
In this blog, we will discuss about car finance and what the benefits that it carries for its perspective aspirants.
Car finance is an option provided by banks and direct lenders to help you get your own car. With car finance, you can manage to buy a car without worrying about your monthly finances.
It involves fixed monthly payments calculated by adding up the principal amount plus the interest rate.
Out of all the forms, there are three important forms of car finance:
- Personal Contract Purchase (PCP)
- Personal Contract Hire (PCH)
- Hire Purchase (HP)
Advantages of Car Finance
There are many benefits of getting car finance. Let’s have a look at a few of the benefits mentioned below:
There is a fixed agreement that involves fixed payments every month. However, you can decide the tenure of your agreement, and the monthly amount depends on the tenure you choose.
The best part is that there are no hidden costs or fees involved in the agreement. Along with the other expenses, you can get your maintenance costs added too.
This will make you tension free knowing that all your costs have been taken care of.
2. No deposit required
Most of the car finances offer a zero deposit option. So if you do not want to pay any deposit, there is no pressure to pay.
You should remember that this option may not be possible with conventional lenders like banks. You have to search hard to find out the responsible direct lender in the UK to get the appropriate deal.
Once you able to get it, you will have the benefit of getting car finance with no deposit.
3. Lesser role of credit score
A credit score is an essential factor in getting a loan. In the UK, if you apply for a personal loan in a bank and have a low credit score, you may be turned down by the bank as it is a measure of your credibility.
But if you are applying for car finance with a low credit score, there are chances you will be offered the loan. You do not need to have the perfect credit score to borrow car finance.
4. Work on credit score
If you have no good credit score, you can improve your credit score by opting for car finance. Car finance is an excellent way to have a positive impact on your credit rating.
By being regular for your monthly payments, you indicate to your lenders that you can pay back your loan on time. In addition, once you are regular in paying, you will have more acceptances by other lenders in the market.
5. You can use any savings or cash
If you are going for car finance, you can put your savings to any other use or make any purchases. You can increase your savings by making the right investment decisions.
Accumulation of cash or savings in the form of investment can help you enjoy later in life.
6. A Cash lump sum is not required
There is no need to pay a lump sum amount to pay back your car finance, as fixed monthly payments are involved.
This implies that you still can go for car finance and fulfil your dreams even if you do not have a lump sum amount.
7. Part-exchange your current car
With car finance, many lenders provide you with an option of part exchanging your current car. This makes you avoid getting into any hassle of exchanging your car privately.
You are offered various options, such as exchanging your car for another one or part-exchange your car.
8. You can opt for a better car
Planning to buy a car, you can go for a better car if you are getting it financed. You may go for a smaller one with cash, but you can decide to purchase a better car with a finance option.
With fixed monthly payments, you can manage even a top-range car as the finance covers all the cost for your car.
9. More secure option
Car finance is a secured option. In the case of cash, you are entirely responsible for the car and all its costs in the future. But with the finance option, you can get few expenses added to your agreement, and the lenders will take it to care.
10. More flexibility
Car finance includes flexibility as an option. Getting your car through car finance provide you flexibility for your car. You can either hand your car back or part-exchange it depending upon the type of finance you choose.
11. Frequent car change
Car finance allows you a frequent car change. If you wish to change your car after a few years, there is an option available with your lender.
With new car and technology, the chances of wearing out of the car become very less, and it’s cheaper to run.
Many direct lenders and financial institutions in the UK offer car finance for their borrowers with additional benefits. They have readymade deals for them in which borrowers have the choices of picking their own best deal.
Therefore, most of the individuals want to take out installment loans for bad credit from direct lenders in the UK. The lenders too are able to dominate in the market to attract more customers. It depends on the customers to choose the best option and go for it.