How Refused Car Finance Can Get You On The Road
Post written in collaboration with Refused Car Finance
The cheapest way to buy a car is to pay for it upfront in cash. However, this might not always be possible. If you don’t have the spare cash to buy a new car then you might want to consider getting a car on finance. Car finance helps to spread the cost of a new or used car. Instead of paying the full amount upfront, customers pay monthly. In this post we explain what car finance is and how, with the help of Refused Car Finance, anyone can get a good deal.
Types of Car Finance Explained
The most common types of car finance agreements are hire purchase (HP) and personal contract purchase (PCP), though other options are available.
Hire purchase (HP)
This is a simple type of car finance. You usually pay a deposit, then make fixed monthly payments over an agreed period. This means you don’t own the vehicle until the last payment is made. Here are some important things to remember with HP:
- In most situations, you first need to put down a deposit of around 10% on the car you want to buy.
- You then pay the rest of the value of the car off in instalments over 12 to 60 months (1 to 5 years).
- You will need a good credit score to get a hire purchase deal at a lowest interest rate.
- There isn’t any mileage restrictions.
- Once you’ve paid half the cost of the car, you might be able to return it and not have to make any more payments.
- You can’t sell or modify the car over the contract term without getting permission first.
- You do not own the car until you have made the final payment.
Personal Contract Purchase (PCP)
A Personal Contract Purchase (PCP) is a bit more complicated. Just like HP you are usually required to pay a deposit and make regular payments for a fixed period. At the end of the PCP contract, you have 3 options: return the car, pay the resale value and keep it, or use the resale value towards buying a new car. Here are some important things to remember with PCP:
- You’ll need to pay a deposit, usually 10% of the value of the vehicle.
- You’ll need to pass a credit check before being accepted for a PCP
- Use the car and make your payments for the duration of your agreed contract.
- You will need to stay within your mileage restriction (you will incur charges if you go over your limit).
- If you want to keep the car, you’ll need to make a final payment, often called a balloon payment.
- If you’re not going to keep the car, you can hand it back without any further payments.
Credit scores and car finance
Your credit score (or more accurately, your credit report) is essentially like your financial footprint. It’s a record of your financial history that lenders use to assess how safe you are to give credit to.
The credit score needed to qualify for a car loan depends on the lender you are applying with. Different lenders have different criteria, so the minimum score needed to qualify will vary depending on which company is providing the financing.
There is no quick fix or fast method for improving your credit score. A good place to begin is by ordering your credit report from each of the credit reporting agencies and reviewing them carefully. The most important thing you can do to improve your credit scores is to make sure all your bills are being paid on time.
Bad Credit Car Finance
Having bad credit doesn’t mean you can’t borrow money to buy the vehicle you need, but it may mean some lenders won’t approve you. If you have bad credit, or if you’ve been rejected by other lenders in the past, a specialist lender like Refused Car Finance can help. Refused Car Finance, are bad credit car finance specialists.
“At Refused Car Finance we don’t judge a person solely on their history. We take into account your current situation to look at what you can afford to repay and find you the best lender based on your personal circumstances. Due to working with a wide range of lenders, we can find the best rates available for each individual.”refusedcarfinance.com
They offer a whole range of finance options, from no deposit, no guarantor, to joint car finance. To secure a bad credit car loan you first need to fill out a short application form on the Refused Car Finance website. They then match you up with the most suitable lenders to get you the best bad credit car finance package. A member of their customer care team will then contact you to talk through the finance offers you have received.