Finance can be a minefield. Anyone wanting to get an advance years ago generally went to a high street bank. If they were buying a car they had the alternative of using a facility from a car dealership and often for convenience they signed up. Dealer finance has not always been the most competitive available; indeed it has to be said it is rarely the case.
The best deals
It is important to not only strike a good deal with a car purchase but also get the best financial package. It is equally important to choose something that is affordable so that there are no problems with meeting monthly instalments down the line. The difficult economic environment in recent years has caused problems enough and some people suddenly found themselves unemployed and unable to meet their financial commitments, resulting in bad credit history that made obtaining new finance more difficult.
Bad credit
Credit risk is an emotive subject. Car credit for bad credit applicants is difficult to obtain through traditional sources that have occupied high streets for decades but the financial environment has changed. The Internet has been the major catalyst for change with companies recognising that there are significant numbers of people with a blemish on their credit records; however, it did not necessarily mean they were bad risks.
People generally recognise that they may have to pay a little more for finance if they have had a problem. Equally, getting approval and successfully paying back any loan will in itself improve the borrowers’ credit status.
There is plenty of research that can be done online when you are looking for a car and the finance to purchase it. Then it’s a matter of deciding between the alternatives provided and choosing the best company to contact.
The basics
There are some basics that such a company will include:
- No arrangement fees
- No deposit required
- No conditions relating to where the buyer must go for a car
- No obligation to use insurance facilities as a condition of loan approval
The longer the term over which any loan runs, the lower the monthly repayments but the more interest will be incurred. It is certainly unwise to extend a loan too long. It is not good financial management to have a loan still running when a car is beginning to fail and in need of replacement.
Running costs
Running a car involves more than raising the finance for the purchase. There is initially insurance and tax before ongoing service and maintenance issues; and of course petrol. Anyone who has owned a car before will know the approximate mileage each month and will know the costs involved. The important thing is to take all these other expenses into account when calculating affordability. There is nothing wrong in being a little conservative when calculating costs. If you end up spending slightly less overall once the deal is finalised – then that’s good news!