The thought of driving your dream car and paying for it through affordable monthly payments is attractive. Getting car financing can make this a reality for you. However, there’s always that question, “is car finance worth it?” Let’s examine if this is indeed a good deal so you’ll have a better idea if this arrangement works well for your particular situation.
Should I Get Car Finance?
Buying a car is one of the biggest decisions you’ll make because it involves a substantial amount of money. And just as with anything that involves such a big commitment, you have to scrutinise your options. Should you buy a car with cash, get car financing, or loan from a bank. Each of these choices has its own pros and cons, and even if the deals are enticing, it’s crucial to give yourself enough time to think about how your decision will affect you in the next years.
If you sign up for a certain car finance agreement that doesn’t suit you, then you might encounter problems along the way. These problems may cause some inconveniences, or worse, they may even be disastrous to your finances. So, before you dive in, learn as much as you can about your options. Let’s look into the different types of car finance agreements that you can choose from.
Types of Car Financing
- Personal Contract Purchase - the cost of the car is spread across a deposit and monthly payments over a certain period. You can own the car by making one final payment.
- Hire Purchase - you also pay a deposit and monthly payments for a set number of years. When you’ve made the last payment, the car is yours to own.
- Car Lease or Personal Contract Hire - it works in the same way as renting a car. You pay a deposit or initial rental, and then monthly payments. Once the contract ends, you need to return the car.
Is Getting a Car on Finance Worth It?
Before you get car finance for your purchase, there are a few things you need to consider. Here, we’ll highlight some of the vital factors that you can think about. Hopefully, these will enable you to arrive at a conclusion on your question “is it worth it to finance a car?”
Almost all car finance deals offer affordable monthly instalments. However, you have to be honest with yourself, is it something that can fit in your monthly budget? Keep in mind that you shouldn’t miss these payments because the financing company could repossess the vehicle. Make sure that your income is sufficient so you can meet the cost of the repayments.
If you miss payments, it’s going to cost you more because of the penalty and other fees. It can also affect your credit score which may have an effect on your being able to access cheap loans or mortgages in the future. It’s also possible that banks won’t approve your loan applications. So, are the monthly payments really affordable for you? Think about this carefully and thoroughly.
The Necessity of Getting a New Car
Many car finance deals offer really cheap monthly payments. But sometimes, it’s not a matter of whether you can afford to pay for car finance or not, but whether you truly need a new car. If getting a car proves to be a necessity, are you prepared to commit to paying for it monthly for the next one to five years?
If you feel that you don’t necessarily need a new car but you could use an upgrade over your current ride, then you can also consider used models. These cars are more affordable and they work just as well. Sometimes, the extra cost of getting a brand new model is just unreasonable. So, if you have a tight budget, look into used cars as another option.
Risks of Damaging the Car
From time to time, we all scratch our vehicles. However, if your car gets plenty of scrapes and bumps quite quickly, you have to evaluate how good you are at taking care of your car.
For example, with a car lease or Personal Contract Purchase, the offers are calculated by working out how the vehicle might be worth when you return it. Of course, it has to still be in good condition. However, if you return a battered vehicle, then expect to pay additional charges because of the damage.
Getting the Right Car Finance Deal for You
Maybe you want to really own the car that you’ll get through car finance, and would want to make modifications to it. There are also car financing options that will suit this particular situation.
Keep in mind that you’re going to need the permission of the finance company if you want to modify the vehicle. This is so since the car is not your property yet as you haven’t completed all payments. If this is the case for you, you can apply for a loan or even buy the car with cash if you have the funds for it.
What’s important here is for you to know what you need and want from a car. When it’s clear to you, it will be much easier to look for the best car finance options so you can make your purchase. Answering “is it worth getting a car on finance?” depends on your needs. But do consider the factors we’ve shared above so that you can weigh your choices well.
Get Car Finance with Carmoola
Once you’re ready to get the car you want, simply download the Carmoola app. We’ll help you with your car purchase through our car financing options. Applications are all processed online through the app. It’s all simple and convenient for you, with no phone calls or personal appearances. Just prepare your ID for verification, and you’ll know if you can qualify to get car financing with us in just a few minutes!
Talk to us today!