Thinking about buying your next set of wheels with finance? Then you've come to the right place because we're anything and everything you need to know about getting car finance in the UK. Read on, and become a pro with finance facts, buying if you've just moved to the UK and much more.
5 facts about the UK car finance market
Twenty-twenty-one was a good year for the car finance market, with a 9.1% increase in cars bought through finance and 28% purchased with car leasing. But those aren't the only facts you need to know about buying a vehicle with finance. Over 90% of car finance providers said they expected growth over the next 12 months, much of which will be concentrated on second-hand cars. Indeed, used cars saw growth of 11.5% over the past year, and it's a trend that looks set to continue. More people than ever are buying or switching cars (perhaps brought on by the pandemic and a reluctance to travel on public transport). Forty-nine per cent of motorists plan on buying a new car this year, with drivers primarily aged between 25 and 34.
Can I get car finance if I've just moved to the UK?
Having a good credit score can improve your chances of getting car finance, but what if you've just moved to the UK and don't have a credit report yet? This can cause issues for many who have moved from a country where they had good credit and access to a car. All of a sudden, they're starting with a clean slate and find it tricky to buy a new set of wheels. While it's more difficult to get car finance without a good credit score, it's not impossible. To get car finance in the UK, you'll need a UK address and previous address history; proof of ID, either a passport, identity card or driving licence; proof of income, either payslips, bank statements or a tax return if you're self-employed. Assuming you have that, it might be possible to get car finance from a lender who doesn't place as much of an emphasis on credit scores. However, you may find yourself paying higher interest rates, so you might decide to wait a while and build up your credit score before applying.
How can I find car finance in the UK
How can you find the best car finance deals in the UK? With so many options, it can be tricky to know where to start. Before applying, you should decide on the type of car finance you want. The primary options are hire purchase (HP), personal contract purchase (PCP) and a direct loan. The first two involve you paying a deposit and then monthly payments throughout the term. PCP also has a final balloon payment. A direct loan is more straightforward snd sees you borrowing the amount for the car and paying it back monthly to the lender. Start by comparing different interest rates, using comparison websites to see which lender has the best deals. It's also helpful if you have a good credit score as this will give you access to more favourable rates. Once you've settled on a lender, you can apply for the amount you'd like to borrow. Carmoola, for example, offers you a seamless, fully online application for car finance.
Is car finance halal in the UK?
Under Sharia law, charging interest or riba is not allowed. Yet, most car finance deals charge interest, meaning they're not halal. Yet, there is still an option for anyone who wants to respect and follow Sharia law. Car finance can be halal and is often called Islamic car financing. With this arrangement, you can buy a car of your choice without having to spend most of your savings on that one big purchase. If you want to get a Hire Purchase or a Personal Contract Purchase agreement, you should see to it that you get one with an interest-free credit arrangement. These options are mostly found on new cars, and it's halal as long as it's interest-free.