Become an Expert in How to Finance a Car Purchase

New to buying a car? 🤔 We have all been there at some point, don’t worry about it. However, now is the time to become familiar with the process of buying and indeed financing a car. We mention financing, as you should know that you have options on how to pay for a car, you don’t have to spend all your hard-earned cash! One of the most popular ways to buy a car is to get car financing. This way, you don’t have to spend all your cash upfront because most of the cost of the vehicle will be spread over a few years through monthly repayments. In today’s blog, we’ll be making you an expert when it comes to financing a car purchase! 

Rather watch a video? Jade has one for you here👇


How to Finance a Private Car Purchase

Car financing companies do understand, that sometimes your dream car will only be available through a private sale. Lots of car finance companies offer car finance even for those private sales. However, there could be other factors that you need to consider. In a private car sale, be prepared to add a few steps to the buying process and be aware that not all finance companies will offer help with a private sale.

One of the things that you may need to do would be to provide additional information to the car finance company. These pieces of information can be given to you by the seller of the car. This is important as it makes sure the sale is secure before the car financing company supplies you with a car finance agreement. This security often includes looking into the vehicle’s history, and knowing that there are no outstanding debts attached to it, and that it’s legally available to be sold. A Hire Purchase Investigation - or HPI check, would be ran and this can be done for under £10 via a number of online sites, or if you are applying via Carmoola, we do that completely free of charge as part of your application.

When you apply for finance for a car purchase, make sure that the seller can provide you with all the necessary information so that you can go through the application process smoothly. Sellers who are legitimate will not have a problem pushing the sale through by giving you everything you need. However, if they don’t want to give those important details, they could be hiding something about the car. As we always say, if something doesn’t seem right with a deal, it's usually because it isn’t right. If this is the case, just walk away, there are plenty of other cars out there… 🚙

And of course it's wise to check the car mechanically too. If this is something you're not able to do yourself, ask a competent friend or get help from a mechanic or organisation such as the AA or RAC, who offer pre-sale inspections.

How to Finance a New Car Purchase

No matter what car financing company you end up choosing, this option should be a lot simpler. Here at Carmoola, our goal is to make car purchases simple and straightforward for any car buyer, no matter new or old. 

So when you are financing a new car purchase, the cost of the vehicle will be split into monthly payments, usually over three to five years. A financed car purchase means you borrow money so that you can buy the car you want and then repay the car finance company through monthly instalments. However there are different options available to consider:

Hire Purchase (HP) and Personal Contract Purchase (PCP) are examples of car financing, you can click on the link to find out the difference! You often need to prepare for a deposit, which is about 10% of the car’s price, and then the lender will take care of the rest. There are even some car finance companies (including Carmoola) who can offer zero deposit deals! But do check out the costs over time, as the interest rates could be higher. Make sure you look for the best car finance deals before you sign a contract. 

HP agreements have higher monthly payments compared to PCP contracts. But by the end of your contract with the lender, when you’ve paid off everything, the car is completely yours. With the PCP agreement, the monthly repayment amount is relatively lower. But when your contract ends, you would need to make a final "balloon payment" before you can own the car. You may also choose to return the vehicle if you don’t want to pay the balloon payment. 

Car leasing is also an option. If you only need a car for a year or two, or you're happy to pay a premium to always own the latest models, then it could be more practical to choose car leasing. You’re going to make monthly payments in the same way, but at the end of the agreement, of course, you need to return the vehicle. But you can get a new car lease on a newer car. This is great if you want to have a new set of wheels every year!

How to Finance a Used Car Purchase?

The process of getting car financing to buy a used car is not that different from buying a new car. And many good dealerships will offer a 12 month warranty. However, with a used car purchase, you would need to add a few steps to the process which you wouldn’t need to do if it’s a new car you’re buying. For example, make a point of getting the car’s history report. Ideally, the car shouldn’t have any history of being in any major accident. Also, its title should be clean and has no mechanical issues. You will also need to get an HPI check, to see if it has some outstanding finance attached to it. (We can do that for you for free here at Carmoola.)

Before you buy a used car, and especially if it's a private sale, don't forget to get an expert mechanic to check it. While the seller may say that it’s all good, you’d still want to hear the opinion of the specialist. If the seller refuses to cooperate with you, that’s usually a red flag. And no matter how cheap the price tag is, it’s just not worth buying a car that may have a bad history, title issues, or mechanical problems. 

Check Out Car Finance with Carmoola

If you want to secure the best finance deals  and become a money saving expert, then you can read more in our other blogs. If all the terminology is getting to you, checkout our jargon busters article to really become an expert in how to finance a car! 

When you’re ready to apply for car financing, do check out what Carmoola has to offer. Everything happens in-app, so you can do it any time of day, or day of the week, and get an instant decision. Securing a car finance deal used to be such a hassle. With all the requirements, paperwork, processes, and long waiting times, buying a car was difficult and exhausting. But with Carmoola, you’ll know how much you can get in just a matter of minutes. And once approved for a budget you can comfortably afford, you can go ahead and search for a car that suits you.

To get started with Carmoola, download the app and enter your personal details like your name and address. Also, get your driver’s licence ready to verify your identity. Simply follow the instructions on the app and in a few minutes, you’ll know the result. Carmoola's primary objective is to make car finance and car purchase much easier for you. Once approved you could be driving your dream car to anywhere you want. You deserve to enjoy the freedom that having your own ride can give! 

Don't forget - finance is always subject to status, and is only available to UK residents aged 18 and over. Failure to keep up your repayments may result in your car being re-possessed and your credit rating being negatively impacted, and therefore  prevent you from accessing other financial products in the future. 

For more car finance tips, check out our blogs for other informative articles. And if you have questions for us about car financing, don’t hesitate to reach out! We’re here to make your car buying journey simpler, straightforward, and fun 😃