No doubt you’ll have had car finance in the past or you’ll know someone who has. Over 90% of cars are bought on finance and for many drivers, it an easy choice! If you’re dipping your toe into the car finance world, you may be wondering what makes car finance so attractive to other drivers? Find out the main benefits of financing your next car.
What Is Car Credit?
Car credit can come in many forms and may be called a car loan or car finance. There are different types of car credit agreements you can choose from. Generally, car finance is when you borrow money to fund your car buying and then make monthly payments back to the lender. Car finance deals are usually split over 3-5 years and you can adapt the deal to suit your monthly budget.
1. Spread The Cost
The main reason why drivers love car finance is the ability to spread the cost of getting a car into affordable monthly payments. Car finance allows you to make monthly payments over several years. It means you don’t have to spend ages saving up for a car payment and you don’t have to empty your savings to do so.
2. Get A Newer & Better Car
Another key benefit of getting a vehicle on finance is the ability to get a newer and better car than you probably would if you were buying with cash. What’s great about newer cars is they have improved safety technology, better fuel economy, and they’re usually more reliable than older cars.
3. Finance Is More Accessible These Days
A car finance deal won’t be offered to everyone who applies but there are more options available to a wide range of people. Many years ago, only the best of the best were offered car finance and things like bad credit car loans, self-employed finance and no deposit deals were not available. Now there are more finance options than there has ever been and car finance lenders are helping more people get access to a car.
4. Improve Your Credit Score
Did you know your car finance can help to improve your credit score? Well, if used correctly, your credit score can soar to new heights when you get a car on finance. As long as you meet each and every finance payment, along with any other financial commitments you may have, your credit score should start to grow! However, if you don’t keep on top of your payments, it can have a detrimental effect on your credit score. Find out more about how car buying affects your credit.
Will I Be Approved For Car Finance?
As we’ve quickly mentioned above, car finance can’t be guaranteed to everyone. It would be wrong for a lender to give a finance deal to someone who simply couldn’t afford to pay it back. If you have a poor credit history, lenders may also be worried that you can’t be trusted to pay back your loan, based on your credit history. To prevent this, lenders will put certain criteria in place which customers need to meet before they could be considered for a finance deal.
Is It Better To Buy A Car With Cash?
In many aspects of life, buying something with cash is always better. When it comes to car buying, cash payments are better. You’ll own the car outright; there’s no monthly payments or interest and you’ll have more negotiation power with sellers. However, the biggest drawback of buying a car with cash is being able to save enough money to buy a car with cash. Even used cars can cost thousands of pounds to buy and it may take you a while to save up this kind of money.
