Do you wish you could ask an expert for help with car finance? 😗 Maybe you’re confused with the numerous terms you’ve encountered like Hire Purchase, APR, balloon payment, and many others. If you feel like shouting, “someone, help me with car finance!” then you’re not alone. Many car buyers who want to get car financing also feel the same way.
It’s important for you to understand what car finance is because you’ll be making a financial commitment if you get one. Buying a car is a big decision to make. You'll be committing to a big spend. Along with that, you also have to decide how you’re actually going to pay for the car. If you get car financing, then that means you will have an agreement with a car finance company to make monthly payments for a certain period.
You may have other questions about car finance. Don’t worry because we’ll cover some of the common questions that car buyers often ask. Let’s start with the first one!
I Need Help With Car Finance Company Options
Before you sign any car finance agreement, you should be sure that it’s the best deal for you. How do you do this? You should know how to compare car finance deals. This means doing your research and taking your time when it comes to getting to know the different car finance companies out there.
You can use a car finance calculator so you’ll have an idea of how much your monthly repayment amount will be. You can play around with the calculator and experiment with the different values. This way, you’ll see how much you need to pay if you set a certain amount for your budget or if you shorten or lengthen the loan term.
Another step you can take when looking for the best car finance company would be to read the reviews about them online. It’s a way to find out if previous clients had a great experience with a particular lender. Of course, you should also reach out to your top car finance companies if you have any questions about the application process or their car finance offers.
I Have a Car on Finance and Can’t Afford It
What do you do if you can no longer meet the monthly repayments for your car finance? The first step you can take is to contact the car finance company. You may try to request a change in your due date so you can avoid any late fees.
Another request you can try to make is to change the schedule for your payment such as extending your car loan term. If you do this, the monthly payment amount could be lower and more affordable for you.
If you need more than minor adjustments to the payment schedule or due date, you may try requesting a deferral. Deferring payments mean you will be allowed to skip a few payments without being charged with fees or penalties.
Finally, don’t hesitate to ask your lender what other options you have. What’s important here is that you’re honest about your financial situation and you’d want to honour the agreement you’ve made with the car finance company.
What Happens If I Don’t Pay My Car Finance UK?
When you miss a payment, the lender will reach out to you and remind you about the missed payment. If this happens the second time, an arrears notice will be sent to you. The lender will keep on sending you the arrears notices in the next six months.
Hopefully, you would have been able to pay off what you owe, otherwise, the lender will already have a court order by that time. You wouldn’t want it to reach this point.
If you still haven’t paid, the lender will be sending you a default notice. This gives you 14 days so that you can settle your arrears. In the event that there are still no payments received, then the lender will terminate your car finance agreement. They will also demand that you pay the amount you owe and that you must return the vehicle.
If you do not have the capacity to pay the whole amount, then the lender will start the process of repossessing the car. Before everything comes down to this, contact your car finance company so that they can help you and give you options on what to do if you’re having financial difficulties.
Can You Return a Financed Car Without Penalty?
You have the option to voluntarily surrender the car if you want to return it if you can’t keep up with the monthly payments anymore. The lender may charge certain fees for this. When you surrender the vehicle, you still have to pay the balance you owe the lender, along with additional fees. If you’re unable to pay the amount, talk to your car finance company about arrangements that can be made so you can pay them.
Keep in mind that even voluntarily surrendering the car to the car finance company will still affect your credit score negatively and it will stay in your credit report for several years. However, it is better to return the car rather than have it repossessed. It’s the more responsible thing to do, and other lenders that you’ll approach in the future may look at it more favourably than repossession.
If you plan on getting car finance, you have to be financially responsible and honour the agreement you have with the lender. Paying on time every time will allow you to maintain a good credit record. It will also help you get better deals in the future, improve your credit score, and maintain good standing among financial institutions.
Sometimes, there are financial setbacks that are just unavoidable. If you ever find yourself in a difficult financial situation, it’s best not to run away from your responsibilities. Lenders would rather work with you on this rather than go through the whole legal process. Talk to your car finance company so that you’ll be given sound advice and guidance on the best steps you can take.
Here at Carmoola, we have built-in flexibility for those unforeseen financial blips! We give you the option to adjust your payments to get you over those moments of financial crisis, so you don't need to worry. Contact us for more information.