Auto Financing Considerations

Auto financing irrespective of  the type vehicle you are looking at, opens up a plethora of options and possible situations.

A high percentage of vehicles that get picked up today are on some form of long-term credit or auto financing agreement. After all, how many of us have a few thousand pounds just sitting spare in the bank ready to buy the car outright?

The problem is that a lot of us just go with the first option offered to us for auto financing, and months down the line find ourselves involved in an uncompromising payment scheme that we cannot afford. Before making you final auto financing decision, make sure that you take these key considerations into account first.

What type of auto financing is available to you?

The majority of car purchases are taken out in some form of Hire Purchase, or HP auto financing. In modern times though it is more common to take the car out on a Personal Contract Purchase, or PCP. The different types of auto financing that are available to you will depend on your own credit score and other factors, but it’s very much worth pursuing.

For example, some people will hire their vehicle on a business lease, but you need to make sure that you fully understand the terms & conditions of this type of arrangement. PCP is preferable to the manufacturer, as it increases their chances of both getting upsells from you and in general it works out better for the seller in the long run. Don’t be pressured into taking a PCP contract if it’s not for you, though!

Take the deal that suits you best – but make sure to explore every avenue of auto financing first.

Always Plan Ahead

You might find yourself going dizzy looking at all these big auto financing APR counts, but you need to make sure that what you may have to pay100% works in line with your financial budget, before jumping in. Auto financing assumptions will get you nowhere, so know your numbers, especially in expensive purchase. For Instance, auto financing HP payments are usually more expensive monthly but general far more flexible should any problems occur with payments, or there has to be a readjustment of your plan.

PCP can be much cheaper in the long run, but before long another financial commitment may have come along – so always make sure that your auto financing plans make sense in five years, not just today.

Part 2

Auto financing

Check Your Credit Rating

Auto financing will mean credit checks. So even if you think your credit score is absolutely perfect, and you think you know this for a fact, it’s better to have your credit rating checked anyway.

Use a reputable name like Experian, as this will update any outdated references to your credit that a company may get when they do a credit check on you. Keep in mind that if your credit record has recently improved dramatically, you may still get rejected, as your old rating may be the most recent copy they have on record.

Read Everything

With auto financing, don’t give anything a half glance. Every letter of your contract must be read to make sure you understand it completely and totally. Understand every fee involved and every single step and procedure along the way. This is the only way you will know that your auto financing financial future won’t flag up nastiest surprises down the line!

In line with FCA requirements, all auto financing agreements should be provided to you in writing, verbal quotation is not enough. Pre-contract information must also be provided, and should have an adequate explanation of every single aspect of the agreement you are about to sign. There should be no pressure. You have every right to take as long as you wish to read the contracts, so don’t let the dealer talk you down with half answers, and if n doubt seek answers from a third party.

Ask Questions

With auto financing no matter how basic the questions don’t feel like you are being silly by asking them. This is the future of your finances and potentially your life you are dealing with.

Auto financing can be complicated so make sure you asked the financial experts the right questions; don’t leave any questions in your head. Ask the person conducting the interview to explain every letter, and if you aren’t satisfied seek a second opinion. A good salesman will be able to deal with questions both basic and extremely complex, so make the salesman work for your money and make sure you have 100% confidence in the process ahead.

Be Honest

For auto financing I would advise to try and be totally honest from the start. Making false applications is a criminal offence so don’t be silly. Give truthful answers to every question, even if it’s potentially going to hurt your application. It’s far better to fail with one firm for telling the truth than get accepted on a short-term lie that could literally ruin everything in the future.

Expect the honesty to be reciprocated. Give the dealership all the right answers, and make sure that you see all the details they are entering on your behalf. Any credit applications that you apply for should be completely legitimate, and if you feel anything is slightly off key go elsewhere – it’s not worth the risk.

To health and vehicle happiness,

Your fearless mechanic,

Phil.