As one of the more expensive items you can buy, a car purchase is an investment that should give you many years of happy motoring. That’s why many people choose to buy a car using finance options, helping make a large expense a more manageable one. Depending on the value of the car, you may be tempted to buy in cash instead, for example, savings you have accumulated already. However, this isn’t always the best option when it comes to a car purchase. Here are the top 3 benefits of choosing car finance.
- Options for Bad Credit Applicants
Car finance isn’t just for those with excellent credit scores, meaning those who have struggled to get credit in the past can still find an option that works for them. With bad credit car finance, affordability is taken into consideration and not just someone’s credit history. For those who have been struggling to save enough money to cover the costs of a car purchase and who have been declined in the past, this type of car finance option can make getting the car you want a reality and still ensure repayments are affordable.
- Afford a Higher Value Vehicle
The advantage of best car finance against a cash purchase enables buyers to afford a much higher value vehicle. Whilst the car of your dreams may have an eye-wateringly high price point if paying cash, spreading this cost, plus interest, over many months and years can make this much more manageable, even if it could mean paying more for the vehicle overall. This means your options become broader when looking for a car as whilst you may not be able to purchase it in a lump sum, paying a regular monthly repayment for a set term is much more convenient. Many people would struggle to buy the latest models if there were no finance options available, so car finance means you could choose low mileage, newer vehicles if you want to.
- Include Optional Extras
Buying a car from a private seller in cash usually means no added extras, just the vehicle itself. It also means there are no options for trading in your current vehicle if you have one. Car finance lenders and dealers cannot only supply credit to cover the value of the vehicle, but also often enable various optional extras if you require them. From extended warranties, to accidental damage and breakdown cover, you can build a purchase package that covers many things you may need. You’ll also have the option to use the value of your current car to bring the costs down of a new one, trading in to save more money.
Depending on the type of finance you choose, you may even be able to give back the car after a few years and choose another, something a Personal Contract Purchase (PCP) agreement would allow. You would pay part of the vehicle off over 3 to 5 years, then have the option to pay the rest of the value as one lump sum to own the vehicle, or return it to the lender and use the remaining value towards another car. Alternatively, a Hire Purchase (HP), although similar to PCP (with typically higher monthly payments), at the end of the term you would own the vehicle with no balloon payment. These types of options would not be available through a cash purchase, however you may end up paying more for the vehicle due to interest.
Whichever type of finance you go for, there are many desirable benefits that could outweigh making a cash purchase. Before agreeing to finance, you should always ensure you can afford the repayments required and that you will not have an issue with maintaining them for the term.