Car Finance Guide

Whether your old car is out of commission or if you need more space for a growing family, finding the right car financing option can be complicated. Most of us don’t have the option to pay the total price upfront. That’s where car financing can help. Our guide introduces and explains the importance of car financing and goes over some of the more popular financing options available. While deciding which option is best for you is based on your needs, we want to provide you with all the information necessary to make a confident decision. To learn more about what car financing options we offer, we encourage you to visit our lot or reach out to discuss all options.

Importance of Understanding Car Finance

To understand how car financing can make the difference from driving off the lot in the car of your dreams to biking to work, it’s important to understand what car financing is. Car financing is a broad umbrella term for the options that let you borrow the necessary funds to buy a vehicle. When you finance a car, you’re agreeing to pay a certain amount each month for a specific amount of time. The option you agreed to will have several conditions that are vital to remember, as failure to do so may result in additional fees.

Different Types of Car Finance

There are several different types of used car finance options available. When determining which option is best for you, we recommend looking at the affordability of the finance type and any terms and conditions that come with the type of loan or contract. It’s important to consider how long you intend to drive the vehicle and its intended use. These can help you find the right option for you. We’ve pulled together a list of some of the most common options, including a breakdown to ensure each type of car finance is explained, including:

  • Personal Loan – Personal loans allow you to borrow the total amount you need to purchase your car. You’ll then pay back the loan through monthly instalments plus interest. It also has the benefit of being unsecured, which means you’re not required to use anything as collateral. This means that if you fail to repay the loan, the lender has the option to see the security to recoup on their investment. Still, an unsecured loan means it has less of a risk to you. However, this type of loan may require a sufficient credit score to be approved.
  • Personal Contract Purchase (PCP) – This style of loan doesn’t have you borrow the entire car price. A PCP loan has you pay a deposit, usually 10% of the car’s worth, and then you make preset monthly payments. It’s important to note that with the style of financing, you will not own the vehicle until you finish your contract. The monthly payments are set through the car’s purchase price, interest rates, and how much the car’s value is predicted to decline throughout your contract’s life. Lastly, when applying for a PCP, your finance provider will determine the car’s expected minimum worth after the agreement.
  • Hire Purchase (HP) – Hire Purchase (HP) agreements are straightforward. You’ll have to pay a deposit, usually 10% of the car’s worth, and then pay off the remaining value, including interest, through monthly payments. It’s usually between one to five years. Upon competition, you’ll need to pay a transfer fee to transfer the car to your name.
  • Leasing – When you lease a car, it’s important to know that you don’t own the vehicle. Instead, consider it like you’re making monthly payments to use the vehicle. The monthly amounts are usually determined by the length of time needed, the cost of the car, and the mileage allowance.
car finance

Answering Your Use Can Finance FAQs

To help provide you with all the information needed to make a confident decision, we’ve compiled a list of some of the most frequently asked questions regarding car financing. If you have any questions or want more information after reading, we encourage you to reach out and talk to our finance team. We’re happy to work with you to find the best deal and option that fits your needs and budget. Take a look at some of the most commonly asked car financing questions:

  • Who Can Finance a Car? – To finance a car, you have to be over 18, and the lending may have its requirements.
  • What Happens If I Miss a Payment? – If you know you’ll miss a payment, it’s always best to reach out to your lender and talk to them. They may be able to help mitigate any issues. However, a missed payment can damage your credit score and continued missed payments may lead to vehicle repossession.
  • Can I Sell a Financed Car? – If you’re still financing your car, you cannot sell it until you pay off the finance in full.
  • Can I End My Car Finance Early? – It depends on the style of financing you choose. For example, if you have a PCP agreement, you must pay at least 50% of the loan amount before you can end it. If not, you’ll be responsible for paying the difference before cancelling. It’s best to talk to your lender.
  • Can I Finance a Car with Bad Credit? – There is no minimum credit score to get finance. However, a poor credit score makes it harder for lenders to agree to help. A bad credit score may lead to increased interest rates. We’ll work with you to find the best deal for your situation.

Get the Car of Your Dreams Today

When you’re looking to drive home with the car of dreams, it’s important to have the best deals that suit your needs. Regardless of your financial circumstances, the team at Used Car Sales Direct is committed to providing you with as much choice as possible to ensure you get favourable terms. We work with a diverse group of financing companies to secure unrivalled deals. When you work with us, you can rely on our team to handle all financing negotiations on your behalf, allowing you to focus just on finding your next car. Don’t hesitate to reach out or visit our lot to discuss possible finance options today.