In the UK, car finance is a well-known method for drivers to obtain a car that is ideally suited to their budget and lifestyle. But, it can often have a bad name due to hearsay and ill-informed misconceptions. Car financing is actually a great way to keep your overall finances in check. Whether you’re hoping to save money to pursue some fun retirement hobbies, or you simply want to reduce your monthly expenses, there are so many reasons why you might want to finance your car, or change your car payment plan. So, consider some of the following car finance myths and you’ll soon be able to make a decision that works for you!
- Car Financing Means Paying More
A lot of people believe that car financing is a trick to make you pay more towards a vehicle in the long run. Although car finances will involve paying some interest on the loan, it doesn’t always turn into a higher overall payment for your car. Car financing is actually a method to spread out the cost over an agreed period of two to five years. Financing allows you to afford a newer car, and you don’t have to fork out a big lump sum for a brand new vehicle. It’s actually an incredibly helpful way to manage your monthly finances.
- PCP Claims Are Very Hard to Make
If you have experience with car financing before, you may not be aware of Motonovo PCP Claims, which could make you eligible for compensation. You may have been mis-sold PCP finance with DCAs, so you can put in a claim and get thousands of pounds back. Many vehicle drivers choose not to pursue this as they assume it would be hard to make the claim, but the process couldn’t be quicker and simpler. If you think you might be eligible it’s definitely worth submitting a claim and assessing how far it goes.
- Car Financing Is Bad for Your Credit Score
Taking out any sort of financing agreement is a great way to improve your credit score and get a positive rating. When it comes to car financing and your credit score, you should be aware that a credit check needs to be carried out. This may have a slight effect on your credit score, but if you make your monthly payments on time it’s a brilliant way to improve your credit rating. Avoid submitting multiple car finance applications in a short space of time as this could negatively affect your rating, and always opt for a soft check when possible.
- You Can Only Get New Cars Via Financing
One of the major advantages of car finance is that it allows you to afford a newer vehicle model without the hefty price tag. However, if you don’t want a brand new shiny car, you don’t have to get one. Many car financing deals allow you to choose models that are a couple of years old so that you can save money on your lower payments and you don’t experience depreciation as soon as you drive the car away.
Hopefully, these car finance myths will help you to make an informed decision about how you purchase your next car!