When it comes to financing a car, many consumers think it’s only really cost-effective on new cars. But the used car finance market is more popular than ever and it’s easy to see why! When you take out a car finance deal on a used car, you are choosing a lower loan amount, affordable monthly payments, and a range of different car finance agreements to consider. Used car finance can also be accessible to those with lower credit scores too! The guide below has been designed to explore why used car finance could benefit you.
- Affordable monthly payments
Car finance allows you to spread the cost of your chosen car into affordable monthly payments. Many people choose to take out a car finance deal as it reduces the burden of forking out thousands of pounds to buy a car outright. Most consumers don’t have this kind of money to hand or don’t want to spend their savings on getting a car. Car finance deals mean that you can borrow the money from a trusted lender and pay it back over a term that suits you and monthly payments that you can afford to meet each month.
- Lower loan amount
It’s no surprise that it can be cheaper to finance a used car over a brand new one. When comparing HP deals, which allow you to spread the total cost of your car into monthly payments over 3-5 years, a brand-new car will always have a higher purchase price. The value of your car determines how much you will need to borrow and pay back. So, opting for a cheaper used car means a lower loan amount which can make your monthly payments smaller and your loan more manageable to pay back.
- Can be suited to lower credit scores
If you have a bad credit score, you may be worried about your chances of approval. It can be hard to come across no credit check car finance deals as lender want to know how you’ve handled credit in the past before they offer you a car finance deal. Car finance for bad credit though is more achievable than ever thanks to bad credit specialists who can help when you apply for car finance. It can be harder to obtain a personal loan with bad credit as they are usually reserved for those with good or excellent score. However, finance agreement such as PCP or hire purchase are a secured loan which means if you fail to repay your loan, the lender has the right to take the car away from you.
- Flexible agreements
When car finance was first introduced, it was only available on brand new cars and the finance options were limited. However, you can get a used car through a personal loan, PCP and hire purchase car finance deals now too. It’s worth looking into each car finance agreement in more details before you commit to getting one as each has its own structure and can be better suited to some people over others. For example, PCP is good if you want low monthly payments and don’t necessarily want to own the car or hire purchase can be suited to lower credit score with the means to own the car at the end of the deal.
- Huge availability
Since the pandemic, new car manufacturers have seen long delays in the production of their vehicles which are still on going. However, the used car market is huge and highly desirable. There is so much availability when it comes to getting a used car and plenty of reputable vehicles to choose from. If you don’t want to get your finance straight from a car dealer, you could consider using a car finance broker who helps you sort the best finance deal for your circumstances but also gives you the freedom to get the car you want from any FCA approved car dealer in the UK!
Until next time.