Is it worth getting a car on finance?

Depending on your financial situation, a car finance deal can be an excellent option, however it’s important to consider all the relevant factors before making your application. 

What is car finance?

Put simply, car finance is when you apply for a loan from a lender to purchase a car then you’ll make repayments back to the lender for a set number of years until the vehicle is paid off or the contract ends. 

There are different types of car finance available with hire purchase and personal contract purchase being the two most common. With hire purchase finance, you’re paying off the car’s value plus interest and will become the owner once the contract ends. 

Personal contract purchase on the other hand requires you to make payments on the car for the duration of the contract so you can drive it. When a personal contract purchase finance contract is completed, you’re expected to return the vehicle in a similar condition to when it was loaned to you, or you could face additional charges.

So why should you finance a car?

Affordability

Financing a car can make it more affordable, especially if you have limited cash available to purchase a vehicle outright. With car finance, you can spread the cost of the car over several years, so you can drive the car immediately while making payments on it.

Improve your credit score

Making regular payments on a car loan can help to improve your credit score, which can have a positive impact on your financial future. This can make it easier for you to secure loans for other large purchases in the future as it will show other lenders that you’re reliable in keeping up with payments.

Drive relatively new used cars

Car finance deals like personal contract purchase are especially popular for new or like-new used cars. Vehicles that are no more than three years old, which means that you don’t have to limit your used car choice to cars that don’t have up-to-date technology and safety features. 

Is it worth getting a car on car finance?

Ultimately, it depends on you, your vehicle requirements and financial situation. A car finance deal is a commitment that can last upwards of five years depending on the lender you choose, so you need to be confident that it’s the best option for you. 

You really need to think about your current and future financial situation

Your financial situation can change at any point, so it’s crucial to think about the likelihood that you could fall behind on payments should this happen.

Be sure that you’re choosing the right finance option for you

For car finance options like hire purchase, the vehicle will become yours once the contract ends but since a finance contract can last years it’s important to choose a car that will still suit your needs when all the payments have been made. 

Similarly with personal contract purchase, there’s potential that you may change your mind mid-contract and want to own the car instead of giving it back which can result in an expensive final payment to cover any future value. 

In conclusion, a car finance deal can be a benefit for you if you’d like a wider choice of cars to choose from. At Motor City Plymouth, we have a great selection of cars for you to choose from, and you can perform a free finance check to see the breakdown of payments if you chose to get a hire purchase or personal contract finance with us. 

You can apply for car finance in Plymouth with us by completing our online application form or by getting in touch.