Did you know that new car registrations are on the up? They were higher than ever in 2016, with over 2.6 million cars registered throughout the year.
And from 1 March, all new cars for the next six months now have the new 17 number plate. However, the forecast is not all rosy. The chief executive of the SMMT (Society of Motor Manufacturers & Traders), Mike Hawes, said on 5 January that he thought this may have been a peak, and that 2017 would see a 5% decline due to the weak pound and the effects of Brexit.
Car finance is one of the most common examples of how we pay for ‘large ticket’ items, and a good credit rating can be the difference between getting a good interest rate or not, or sometimes getting any deal at all.
What are your car finance options?
If you decide to borrow credit to buy a car, the marketplace is vast, with plenty of rate and payment options. It’s worth comparing different loans and methods of finance so you get the one that’s best suited to your needs.
- A personal (or unsecured) loan is usually at a fixed rate of interest over a fixed term – they typically tend to be up to £25,000 and last for up to 5 years. Find out more about personal loans
- With hire purchase, you pay a deposit to the dealer to drive the car away, and pay the rest monthly with interest over a set period of time.
- A PCP loan is usually a lower monthly payment over a fixed period of time, and at the end you have a number of options including buying it outright.
- Some dealers also offer 0% purchase deals, and some people go through specialist brokers.
- Paying it off in full with a long-term 0% purchase credit card could be another option, as many dealers now accept credit cards. For example, if you want more flexible monthly payments. If you do choose to use a card, then it’s important to pay the card’s minimum repayments. Just make sure you budget to pay off the balance within the life of the 0% deal if you can, to avoid paying unnecessary interest. Compare credit cards here We are a credit broker not a lender, working with selected lenders.†
Whatever you decide, just try to make sure that you can afford the monthly payments and that you would still be able to afford them, even if your circumstances change. There are different pros and cons to all of these, depending on your individual circumstances. Do your research – and always remember to check the small print for hidden catches!
How can I compare car finance, loans and credit cards?
Now Experian can help you find credit cards and personal loans you’re more likely to be accepted for, and it won’t negatively impact your credit rating. Find out more about car finance deals here
Experian CreditMatcher is a free independent service that helps you compare credit cards and personal loans you’re more likely to get, based on your credit information, and gives you your Experian Credit Score FREE forever.
Remember though that if you are accepted, the interest rate or promotional deal you get from lenders may be different to the one advertised.
Get your credit report in shape too
It’s a good idea to check your Experian Credit Report before you make the application. This allows you to see what the lender may use about you, and gives you the chance to correct any inaccuracies and update any out-of date information. The credit score the lender gives you helps them decide whether to accept you as a customer or not – usually, the higher your credit score, the better your chance of getting your loan.
The Experian Credit Score is free, forever. Checking your Experian Credit Score before you apply for new credit can give you an indication of how lenders may view you based on information in your Experian Credit Report.
†Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.
Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to.
Car finance: Your car may be required as security and you could lose your vehicle if you don’t keep up with repayments
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(updated Mar 2017 from original blog post Sep 2016)