When it comes to purchasing a new car, the majority of consumers in the UK are turning to finance as their car buying option. So why are consumers choosing to buy their cars on finance, rather than outright?
The most attractive aspect of using finance to buy your car is how you can spread the cost of the vehicle over a number of months. This means that you don’t have to have a large amount of money saved to buy a car outright. When you choose a car on finance, you often have more choice in terms of the age, condition and quality of the car.
Applying is also a lot quicker than it used to be, with some providers able to give you a fast online decision on your finance options.
When you buy a car on finance, the most important aspect is the interest rate you pay on the amount borrowed. This is used to calculate the monthly payments – the combined cost of the car and the interest payments. Your interest rate will be based on your credit history. The better your history, the lower your interest rate. However, you can still get a good deal with a bad credit rating, providing you choose a trusted, approved lender. Look for one that conducts a soft credit search.
You may think that when you buy a car on finance, you will be hit with lots of hidden costs and charges. That’s not the case. All reputable car finance providers, such as Creditplus, are regulated and approved by the Financial Conduct Authority (FCA). They ensure that strict consumer guidelines are adhered to, meaning that you are provided with a clear breakdown of the cost of your finance package, as well as any other charges and fees that you may incur.
There are three main types of package available to finance cars in the UK:
Personal contract purchase (PCP) – Ideal for new or nearly new cars, PCP has lower monthly payments and three options at the end of the agreement.
Hire purchase – Fixed monthly payments spreading the entire cost of the package over the length of the agreement.
Lease purchase – Defer some of the cost to one large balloon payment at the end of the finance agreement.
Each option has different qualities that suit different circumstances. Use the Creditplus car finance options tool to get an idea of which option might be right for you.
While buying a car outright can cost less overall, the flexibility and number of different products on offer when you choose to buy a car on finance mean it can often be the better option. The most important thing you must do is choose a reputable provider.
Creditplus have over 12 years experience providing cars on finance in the UK, and are fully regulated by the FCA. We pride ourselves on being an ethical lender, making sure we provide all our customers with all the information they need to make the right decision on their finance options. So if you think buying a car on finance is the right option for you, why not apply with Creditplus today? Note: an application with Creditplus will not affect your credit file and is obligation free.
If you require further assistance, our team of Customer Advisors are here to help. We're open six days a week - you can view our opening hours here - and we're more than happy to answer your questions.