The majority of people in the UK use some sort of car finance deal to buy their cars these days, but is it worth it? Using car finance to purchase a new vehicle can be a great way to get the car you want without stumping up the cash upfront. However, there are certain things to be aware of before you take out a car finance deal.
After buying a house, purchasing a car is one of the biggest expenditures most of us will make in our lives. Therefore, it's important to know exactly what you're getting into before getting into the details of a car finance plan.
Financing a car works similarly to taking out a secured loan. Pretty much any car finance deal will involve you paying monthly installments to your lender. While this can spread the initial cost of a new car over a number of years, you need to make sure your monthly repayments are affordable.
If you miss a payment, you could be hit with late payment fees and other charges which will only increase your debt. Missing payments can also negatively affect your credit score. Bad credit can affect your ability to access credit in the future, including other car finance deals and mortgages. Your car may also be repossessed, meaning all that money you've paid towards it will count for nothing.