Car Finance options
Many people cannot afford to pay for a car with a single outright payment. The most common way to purchase a vehicle is with borrowing from a bank, building society, other lender or arranged via the motor dealer. There are two types of loan: secured and unsecured.
If you choose to take out a secured loan you may benefit from a lower interest rate, but these can be hard to obtain if you have a low credit score. With a secured loan you will not have ownership of the car until the balance of the loan is paid off in full. An unsecured loan may have a higher interest rate, but it means that you will legally own the vehicle, as the loan is attached to you and not the car. Other finance options include personal contract purchase, whereby you pay a fixed amount each month and then have the option to buy, return, or upgrade the car at the end of the contract period; and hire purchase, where you make monthly payments with an option to purchase the vehicle at the end of the contract period.
Credit score checks
Credit score checks will always be required if you intend to pay for a car with finance. These checks will have a small, short-term effect on your credit score. The effect on your credit score of buying a car will depend on how you intendto pay for the vehicle. If you pay with a credit card or with a loan it may have a temporary effect, though this will depend on your credit history, how much of your available credit you use, and whether you make payments on time. Before you decide to purchase a car, you should always work out how much money you are going to require. You need to take into account the whole duration of the payment period. Calculating the monthly payment amount is the first step to ensuring that you get the correct amount of money for your purchase. If you leave yourself short-changed then you could have problems making payment on time, which will have a negative effect on your credit score.
Talk to Lookers
Talk with a Lookers member of staff for more information on the various types of car finance options available, along with the benefits of each one, to decide which payment method may be best suitable for your needs.