Getting a car on finance is a great way to drive the vehicle you want without the worry. There are pros and cons in doing so, and in this article, we’re going to explain 14 benefits of buying a car on finance.
Firstly, though, what is car finance?
What is car finance?
Car finance is a way of getting behind the wheel of the car you want by paying fixed monthly payments.
It comes in several different forms, although the three most common are personal contract hire (PCH or lease), personal contract purchase (PCP) and hire purchase (HP).
You can read more about car finance and decide which type suits your circumstances by clicking the link below.
Benefits of buying a car on finance
When you choose a car on finance, you get to enjoy a whole host of advantages:
1. You know what you’re paying
Your payments are fixed with a car finance agreement, and your agreement lasts for how long you want it to. Therefore, you always know how much you need to pay and when you’ll be paying it.
There are no surprise costs or fees, and if you include maintenance costs in your agreement – which you can do with some lease deals – you can take to the road with complete peace of mind, knowing everything is already paid for.
2. You don’t have to pay a deposit
All the vehicles we offer, depending on your finance approval come with a £0 deposit option. Some lenders may ask for a deposit. That means, if you don’t want to or can’t pay a deposit, there’s no pressure for you to do so. This is probably one of the major benefits of buying a car on finance.
3. You can get car finance with less than perfect credit
You don’t have to have excellent credit to get car finance. Whereas if you applied for a personal loan, you might get turned down by the bank, there’s more chance you’ll get accepted for car finance.
We work with many bad credit lenders who help those with less than perfect credit. And we have a great track record in securing car finance agreements for customers with bad credit.
4. You can build your credit score
If you have bad credit or a less than perfect score, buying a car on finance is a great way to improve your credit rating.
By keeping up with your monthly payments, you’re proving to future lenders that you can pay your loan back.
In the future, that usually means that you’ll be accepted by more lenders, meaning your monthly payments will be lower.
5. You can use any savings or cash for other purchases
By buying a car on finance, you can keep any savings you have for other purchases.
That might be making home improvements or treating yourself to a well-deserved trip away.
Another option is to invest your savings or cash to accumulate interest so you can enjoy it more later down the line.
6. No need to pay a cash lump sum
As the cost of your vehicle is spread over fixed monthly payments, there’s no cash lump sum to pay.
That means that you don’t need access to thousands of pounds. And even if you do have the money, you can save it for something else.
7. You can part-exchange your current car
With any of our finance agreements, you can part-exchange your current car. That means you don’t have to worry about the hassle of getting rid of it privately.
8. No worries about selling your car on
Whether it’s your current vehicle or your new one, when you buy a car on finance, there’s no worry about what you do with it after your agreement ends.
Depending on the type of finance you choose, you can either part exchange the car for another one, hand the car back and walk away, or keep the car as your own.
9. You can use your car as a deposit on a new one
If there’s any equity in your car when you decide to trade it in – where your car is worth more than any outstanding finance – you can use that as a deposit to lower your monthly payments on a new one.
10. Get a better car
If you decide to buy your car on finance, you can usually get a better car than would usually be available if you decided to buy it with cash.
That’s because with most finance deals you’re only even covering the cost of a part of the car, and even a top-of-the-range model can come with low monthly payments.
11. More security when buying through car finance
If you decide to buy the car outright through a personal loan or with savings, you’re entirely responsible for the vehicle and any costs you may face in the future.
Whereas if you buy using car finance, there’s more security.
For example, if you add maintenance to your finance agreement, there’s no need to worry about servicing, MOTs and tyres.
12. More flexibility than buying with cash
When you buy a car through finance you have more flexibility than when you do with cash.
That’s because, depending on the type of finance you choose, you can either hand the car back, part exchange it for another or keep it.
13. Change your car more frequently
When you buy a car on finance, it allows you to change your vehicle more frequently.
That means you can enjoy a new car every few years and stay up to date with the latest styling and technology.
With a newer car, it also means there’s less to worry about with reliability and fuel economy- so it’s cheaper to run.
14. You can check your eligibility before you buy your car
Some dealers or brokers won’t offer this option; they’ll take you straight into a hard search. If you have good credit, you might not be too concerned about this, but if you’re unsure, you should find a dealer who does a soft search first. A soft search gives an idea of whether you’re likely to be accepted for finance, which poses less risk. A soft search won’t harm your credit score, either.
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