Vehicle Finance Myths Debunked: Separating Facts from Fiction
Whether you’re a seasoned vehicle finance pro or a newbie to this financial avenue, you’ve likely encountered various myths surrounding vehicle financing. These myths can cloud your judgement and prevent you from making informed decisions.
Myth: People with poor credit cannot get vehicle finance
False
While it’s true that securing finance can be more challenging with a poor credit score, it’s not impossible. Lenders typically assess your credit file to determine your creditworthiness. A good credit score reflects a history of timely and complete repayments, while a poor credit score might indicate missed payments, high existing debt, or no credit history.
Specialist “poor credit” lenders adopt a different approach. They focus more on your affordability then your credit history. So, if you have poor credit, there are still options available to explore.
Myth: Vehicle Finance is a lengthy and complicated process
False
While financing may involve some paperwork and due diligence, it’s not an overly complex or lengthy process. With the right guidance, the process can be straightforward and swift.
Myth: You have to have a deposit
False
While some vehcile finance deals might require a deposit (like Personal Contract Purchase or Lease Purchase), there are numerous deals available with a 0% deposit. A deposit can certainly reduce your loan amount, but it’s not a strict requirement. If you’re keen to save on interest and reduce monthly payments, consider putting down a deposit.
Moreover, you can utilise your current vehicle as a deposit, providing you own it outright of have equity in the vehicle if its on finance.
Myth: You're Stuck with the same finance terms
False
If your financial circumstances change or you want to alter your repayment terms, you have options. Refinancing is one such solution, allowing you to adjust the loan term or interest rate. It’s essential to communicate with your lender and explore possibilities that align with your current situation.
Myth: You can't have more than one vehicle on finance at a time
False
Contrary to this myth, you can indeed have more than one vehicle on finance simultaneously. However, this situation should be approached with caution. Managing multiple vehicles under finance required careful consideration of monthly payments and associated costs. it’s vital to ensure you can comfortably afford both the monthly payments and the general expenses that come with owning one, let along two vehicles.
Myth: Vehicle Finance is only for individuals with high incomes
False
While a higher incomes can make securing finance easier, it’s not the sole deciding facotr. Lenders consider various aspects, including credit history, current financial obligations, and the vehicle’s price. People with moderate or even lower incomes can often obtain suitable financing options.
Myth: Only Over 21s can get vehicle finance
False
Vehicle finance is not exclusive to individuals over the age of 21. In fact, anyone above 18 years old can apply for vehicle finance. However, it’s worth noting that those under 21 might face challenges in getting approved without a guarantor due to their limited credit history. It’s all about demonstrating your financial responsibility and ability to meet repayment obligations.
Myth: You can only finance new cars
False
Vehicle finance isn’t limited to new cars. You can also finance used vehicles. Many financing options cater to both new and used vehicles, providing flexibility based on your preferences and budget.
When it comes to vehicle finance, it’s crucial to be well-informed an not be swayed by common myths. By dispelling these misconceptions, we hope to empower you to make better decisions in your vehicle financing journey. Remember, understanding the facts is key to a successful and informed financial decision-making process.