Every other when we go out on road and see new amazing car models, we start craving to drive one as soon as possible but the only obstacle that comes on the way is the cash to finance the purchase of a new car. Along with the financing issue, other confusions related to car financing also hit our minds, this is the reason the term vehicle financing has loads of search volume on Google, while consumer insight portal Answer The Public has found that web users commonly ask over 40 questions in relation to this topic.
Vehicle hire specialists Northgate tried to answer five key questions surrounding vehicle finance:
What does vehicle finance mean?
Making a one-off payment for a vehicle is something that a lot of motorists will struggle to afford. Fortunately, vehicle finance allows you to cover the cost over an agreed amount of time.
Who qualifies for vehicle finance?
Unfortunately, there is no clear answer to this question. This is because eligibility for vehicle finance will depend on the firm or lender, as well as your individual circumstances.
However, with so many options available, just about every driver should be able to find something to suit them.
Here are some of your choices:
Hire purchase — Often shortened to HP, this usually sees you putting down an upfront deposit and then paying off the rest of the vehicle via a number of monthly installments.
Personal contract hire — Also known by the acronym PCH and sometimes referred to as personal leasing, this option will see you renting a vehicle for an agreed amount of time. At the end of the agreement, you simply hand back the vehicle.
Personal contract purchase — Commonly written as PCP, this is almost the middle of the road between HP and PCP. This is because you’ll pay a deposit for the vehicle and then make monthly repayments over an agreed period. At the end of the term, you can either choose to keep the vehicle, trade it in for a replacement motor or return the vehicle and walk away.
How long does vehicle finance take?
The turnaround time for getting vehicle finance approved is often no more than 48 business hours. However, take note that a credit assistance provider will need to clarify the following aspects before giving the thumbs up:
- That the loan produce that they are offering meets your objectives and requirements
- That there isn’t a significant risk of the loan immediately putting you in any financial hardship.
- That there isn’t a significant risk of the loan putting you in any financial hardship at any point during your loan term.
What do you need for vehicle finance?
The rate of financing that is offered to you will be affected by your credit score. Bring along the following to the dealership:
- Your driver’s license.
- Your insurance card.
- Your two most recent pay slips.
- Proof of residency — for example, a utility bill which has your name printed on it.
- A list of references — each of these individuals should be referred to with their name, address, and contact number. Furthermore, they should not live in your household.
- Any trade documents you have to hand — with a title and registration featured.
How do I transfer vehicle finance?
If you still have outstanding finance on your current vehicle but have decided that it’s about time you got a new set of wheels, there are options available. While it isn’t as easy as swapping your finance over from one vehicle to the next, take a look to see if any of these solutions appeal to you:
Settle the finance yourself — Pay off an agreement early and you will be free to do what you want when getting your hands on a new vehicle. Just be sure that your finance company has provided you with a letter as proof that an agreement has been settled.
Enquire with the dealer to see if they can settle the finance — In some cases, the dealership where you are going for your next vehicle can manage your outstanding finance. The dealer will need to have the right license to process this. If they do, then the settlement value will simply be transferred across to the new finance agreement that has been drawn up for your next set of wheels.
See if you receive protection through the Halves & Thirds Rule — There are certain types of finance where you have the opportunity to voluntary terminate your agreement so long as you have paid at least half of the total amount (deposit and payments included). This is known as protection through the Halves & Thirds Rule.
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