Let’s are honest, the days of purchasing cars outright for many of us are long gone. Today, getting a car finance deal to cover the cost of the car over an agreed period of time is the most popular way of acquiring a car. So, are you wondering how much you can borrow for a car?
If you are, the answer is very simple. You can borrow as much as we think you can afford to pay back. This depends on the type of car you are interested in, the size of the deposit you wish to place and what your monthly budget is. The amount you can borrow may also be affected by your credit rating also.
When it comes to financing your car, it all comes down to affordability and whether you can pay back the money you are about to borrow. Before Hippo Motor finance can calculate how much you will need to borrow, we need to know a few details.
One of the first things we need to know is the type of car you are interested in. Whether you know the exact car you want or need help from us deciding, finding the right car gives you an idea of the amount of money you will need to borrow.
Once you know the type of car you want, the next thing to know is your monthly budget. This is the most important part because you need to be well aware of what you can afford to pay each month. If the car you want is a premium model and you can only afford a certain amount a month, you may have to opt for a longer finance agreement to pay back the money you will borrow for the finance.
In addition to your monthly budget, you can decide on whether you want to place a deposit down and how much that deposit will be. The higher the deposit you place, the lower those monthly payments will be and the less you will have to borrow overall.
When you apply for car finance, you will be subjected to a hard credit check. This gives the finance company an idea of whether you have an excellent, good, fair, poor or bad credit score. The rating you have affects how much you can borrow. The better the credit rating, the more likely you will be to borrow more money because you have a positive credit history and are deemed less risky to lend money to.
If you have poor or bad credit, you may still be able to borrow money, but less than you would if you have good credit. You will also be required to pay higher interest rates because the lender will want cover the risk of lending to you.
Once you know how much you can borrow, what car you want to buy and what your budget is going to be, the next step is to choose a finance option. The two most popular finance options are Personal Contract Purchase and Hire Purchase agreements.
There are significant differences between these two agreements and it depends on your needs, which one is more suitable for you. HP agreements require higher monthly payments than the PCP agreements. This is because a Hire Purchase agreement pays off the value of the car over the period of the agreement through the monthly budgets and the deposit. There is no final payment.
With a PCP deal, it works differently. You place a deposit and pay your monthly payments and at the end, you can either hand the car back or pay a Guaranteed Minimum Future Value in the form of a balloon payment. On a PCP deal, the monthly payments are lower than on a HP deal because you have that option of handing the car back or paying the balloon payment.
For either deal, you will borrow the same amount of money for the car. This is about how you choose to pay that money back. If you want lower monthly payments and flexibility at the end of the agreement, it’s best to choose a PCP deal. If you are sure you will want to take ownership and don’t mind paying a little extra a month, it’s best to choose a HP deal.
If you are interested in getting car finance and you know the type of cat you want, but unsure how much you can borrow, enquire with us. Our staff will guide you through the process and find you the right car and the right deal for you. At Hippo Motor Finance, we get you a car and a finance deal in one great package that suits exactly what you are looking for.
We expect more than 51% of our customers to achieve this rate.
|Loan Amount||Total Cost of Credit||Representative APR||48 Monthly Payments||Deposit Amount||Loan Term||Total Amount Payable|
|£7,500||£3019.16||19.1% APR||£219.77||£0||48 Months||£10,519.16|
We are a broker not a lender and our registered office is Trident Park, Trident Way, Blackburn BB1 3NU. Our contact number is 01254 919000