Purchasing a car is one of the most critical priorities for personal and professional life. However, buying it straight away becomes impossible with limited finances and liabilities. Buying a car seems nearly impossible despite rising expenses and the limited disposable income available.
What if you can run your favourite car without buying it upfront?
Yes, you can do so with the help of car finance.
Instead of buying the car outright, car finance grants flexibility with how you wish to fund the car purchase. You can finance it in 4 ways- Hire Purchase, Personal Contract Purchase, Personal Contract Hire or a personal loan.
The blog lists car finance and why it is best for individuals who want to own a car.
How does car finance work?
A consumer borrows money from the dealership or the direct lender in a car finance agreement. However, the lender asks for a deposit that’s 10% of the car’s price. It reduces the overall liabilities on the car loan and helps you fetch low interest rates.
He then pays the amount borrowed with the interest rates until the term ends. By the end of the agreement, the customer can either buy the car with a balloon payment or switch the car to another one. In the latter case, the person resumes with the new agreement and terms.
The agreement usually lasts for 5-7 years maximum. You can choose a shorter period with high monthly repayments or vice versa. To work out the best possible solution, use a car finance calculator. It would help you know the monthly repayments and budget accordingly.
What are the potential advantages of buying a car on finance?
The advantage of buying a car on finance is – repayments. You can spread the cost of the car into easy and affordable repayments to pay every month. Precisely, you can break down the big amount into affordable bits without sweeping off the savings. Here are other benefits of buying a car on a finance agreement:
1) Drive the latest model without saving enough
It is one of the most popular reasons individuals buy a car on finance. It grants them access to the latest and trendy models.
One can drive it just by providing the deposit or paying the cost of the car in instalments. It eliminates the hassle of waiting until you save enough to buy the car. It is good for the one who wants to drive the car before owning it but lacks the savings.
2) Flexibility to choose a used or a new car
Most customers seeking cars on finance are generally new drivers. They lack sufficient driving experience and hence prefer used car finance. It is more affordable than a new one.
Moreover, you can reduce the overall costs by exploring the best options available on the used car from dealerships or a direct lender. While choosing a used car, ensure you have every document about the car’s insurance or previous ownership. It would help you decide whether to go for it or not.
Alternatively, experienced car drivers can avail of new car finance with stellar credit scores and deposits. You can spot the latest models to choose from. Short-list the specs you want in a car and check the cost of the vehicle respectively. Furthermore, analyse ways to reduce expenses with the expert lender’s assistance.
3) Get car finance regardless of the credit score
Though getting car finance with a poor credit profile is challenging, some lenders may provide it. In this situation, it is easier to get one from lenders than dealerships. It is because lenders provide personalised options to start your driving journey that dealerships lack.
Thus, you share a high chance of qualifying. However, improve your financials before seeking car finance with bad credit in Ireland’s marketplace. It can help you get a better deal despite low credit. Well, some preparations may help:
- Pay off some pending debts
- Consolidate high-interest debts for a credit boost
- Ensure a low debt-to-income ratio by spending less
- Improve your income and earning aspects
- Analyse the potential to get a guarantor to get car finance at poor credit
4) Business Car finance can be tax-deductible
Just like buying a car for personal purposes, you can also check car finance quotes for business. If you have a business or are self-employed, you may need a car for your unique needs. You may benefit from car finance in terms of tax.
According to a fact, “if you spend 30% of the car for business purposes, you can claim 30% of your payments as tax deductible.” Create a timesheet and mention every time you use the car for business purposes. It would help you record and claim deductions easily.
5) Improves your credit score significantly
When you apply for a car finance quote, the lender conducts a detailed analysis of your finances. It helps them figure out the affordability potential of the borrower. You may qualify even with a bad credit score if you have a stable income, debts and limited spending.
Additionally, if you have saved some amount solely for the car purchase, you can provide it as a deposit. It would help you reduce the interest rates and overall loan costs. Hence, it ensures an affordable car finance loan agreement.
In some circumstances, individuals with low income and credit seek car finance. It could be because of seeking potential job options, etc., However, qualifying at poor income and credit is difficult. If you cannot provide a deposit, check whether or not you can get a guarantor. Having a regular income and credit history may help you qualify. If he makes payment on your behalf and clears the agreement in full, it boosts the credit history of both the persons involved.
6) Use the car equity to get a new quote
If there is equity in your car and you decide to trade it, you can benefit from the new quote. It is for those who want to shift to the latest model with a new car finance quote. Thus, if the car value increased since you took car finance, you can use the equity earned as a deposit on the new loan quote. It would help you reduce the overall deposit costs.
It is beneficial if you have a low credit score. However, if you still need cash flexibility to provide as a deposit, explore loans in Ireland for bad credit scores. You can bridge the deposit requirement and clock in an affordable quote hassle-free.
Buying the car of your dreams is exciting but, at the same time, challenging. If you lack the potential to buy the car outright but need it now, car finance can help. From buying a car on finance as a first-time driver to exchanging it for a new one, you can do it all with a car on finance. Check the best option according to your car purchase expectations, purpose and finances.