1. Does car finance affect mortgage eligibility?
Applying for car finance can affect your credit rating in the same way as any other credit facility. Ensuring you meet your repayment obligations and never miss a payment will help you build and maintain a good credit score.
2. Can I sell a vehicle purchased on finance?
Usually the answer is no as the car remains the property of the service provider until you have paid for it in full. The only exception is if you take out a personal loan to pay for a car outright; in which case it is yours to do as you wish.
3. How does car finance work?
Most car finance options work in a similar way, with an initial deposit of around 10% followed by a series of monthly repayments. Some car finance deals result in automatic ownership of the vehicle at the end of the term whereas others require a final ‘balloon payment’ before ownership is transferred.
4. Is car finance with no deposit available?
Yes there are plenty of deals available from specialist lenders with no initial down payment required. If you would like to finance a car purchase without paying a deposit, consult with a broker to discuss the available options.
5. Can I qualify for car finance with bad credit?
You simply need to ensure you target the right lenders with your application. Your broker will be able to point you in the direction of car finance providers that specialise in ‘subprime’ credit.
6. What is the best car finance option available?
It depends entirely on your priorities and intended outcome. Hire purchase or PCP options are good choices if you would like to take ownership of the car at the end of the term. If you would prefer lower monthly repayments and the option of regular upgrades, leasing could be a better option.
7. Can I exit a car finance agreement early?
There are two ways a car finance agreement can be exited early. You can either repay the outstanding balance in full, or hand the car back to the service provider and pay a final settlement figure.
8. Which is the cheapest car finance option?
Cost-effectiveness varies on the basis of a variety of factors. Examples of which include the size of the deposit you provide, the length of the repayment period, the APR on the loan and other associated borrowing costs. All of which must be carefully considered before choosing a car finance plan.
9. Can I get car finance if I have an IVA?
As with poor credit, it is perfectly possible to qualify for car finance with an IVA. You simply need to ensure you target the right service providers under the advancement of an independent car finance company or broker.
10. What is the difference between HP and PCP car finance?
PCP and HP car finance both involve payment of an initial deposit, followed by a series of monthly repayments over 1 to 5 years. However, while repayments on HP car finance gradually pay off the price of the car in its entirety, an additional ‘balloon payment’ must be made at the end of a PCP agreement to take ownership of the car.