With so many people looking for affordable car finance, it is important to offer the top tips to this. There are a number of factors that will affect the affordability of car finance and these are factors that you need to consider.
Consider Your Credit Rating
As much as you would love to ignore it, you need to consider your credit rating. This will directly affect your car finance and whether it is affordable – especially if you are looking for lower interest rates. If a lender can trust you to pay back a loan, they will offer you more competitive interest rates, so you get affordable car finance. Your credit rating instantly tells a lender whether you have defaulted on other payments or whether you already have a lot of loans.
If you want the best deals, you will need a good credit score, so it may work out best to find ways to improve your credit first. There are numerous ways to do this, including owning your own home, not moving as much and opening a joint account with your partner!
Consider Your Deposit
Save money up before you start hunting around for your car finance. By having a deposit, you will have more negotiation power – after all, you have proven that you can be sensible with your finances, which looks good for the lender. The higher your deposit, the more chance you have of getting a lower interest rate – some companies may even offer you 0 percent!
Consider Any Extras
While you are looking for car finance that you can afford, you will also need to consider any extras that are thrown into your contract. Some dealerships will be able to throw in extended warranties or some service packages as a way to make up for the extra money spent on the finance. These may be something to consider, especially if you are worried about anything going wrong with the car.
Is Leasing a Better Option?
If you are still struggling to find affordable car finance, leasing may be the best option for you. Take your time to consider this option, as it may work out beneficial – after all, you do not need to worry about tax or paying as much in car insurance! By leasing the car, you only need to pay for the time that you need to use it, instead of having your car sitting on the roadside.
Whatever your circumstances, there are bound to be occasions when immediate cash funds are not available for an important purchase or repair. In order to help you make a decision, information can be found about credit cards, store cards and loans from any one of the many comparison websites.
It is probably true to say that most will seek a short term credit solution to pay for their project. In real terms, unless friends or family are willing to provide a short term loan, the more popular choices will be to use either a credit or store card.
There can be advantages to using a store card in certain circumstances. Some stores offer special discounts to customers if they use their card and if the user is in the position of being able to pay off the card in full by the due date, this could mean real savings.
Another advantage to a store card is that they often provide a reasonably lengthy interest free period on purchases. Again, for a customer who knows they can budget to meet payments by the time this period ends, a store card can be the right choice for short term credit.
The huge disadvantage of a store card is the cost of credit if the user cannot pay the balance off by the time interest is charged. These interest rates are notoriously high and are what you might expect to pay if you were using a bad credit credit card. So not something you would normally look use unless you had trouble obtaining credit elsewhere.
Credit cards can also offer users generous interest free periods, especially for new users. With some providers offering up to 18 months interest free purchasing ability, this gives the advantages of a short term loan at no cost.
Purchasers are also offered some protection on their purchases if they have been paid for by a credit card. The consumer credit act means that the cost of purchases made using a credit card can be reclaimed in the event of a supplier going bust, goods not being received, or goods being damaged.
Purchasers might consider that this protection is a real potential money saver and favour a credit card for that reason. Purchases made on a store card, unless the balance is then paid using a credit card, are not protected in the same way.
Credit limits can be a big deciding factor when choosing between a store card and credit card. In general, the opening credit limit for a store card is relatively low, which may rule this option out for larger purchases.
It is also worth a purchaser considering where they want to shop. A credit card obviously gives many more options that a store card that restricts purchases to their own outlet.
Being restricted to a single store providing its own store card can cost a consumer money in unexpected ways. Using a store card means a purchaser cannot shop around to get the best price on their goods.
Many store card providers offer their users ‘rewards’, such as collecting points that can be cashed in later on. Consumers should investigate these schemes carefully, as often they are not as attractive as they first seem and do not outweigh the very high potential cost of credit.
It is worth a consumer considering their credit rating when applying for a credit or store card. If a consumer has several store cards at different stores, this could adversely affect their future credit rating.
Store cards are much easier to obtain than a credit card, which is not necessarily a good thing. It is much easier for consumers to get into debt problems with store cards.
Introductory offers from stores for opening a store card account with them can be enticing and lure a shopper into thinking they are making a saving. A user might be tempted into buying more than they intended as a result.
It is always worth remembering that whatever the inducement to take out a store card, it can cost as much as 50% more than a credit card.
