Getting Credit for your New Car

Many people today, 85% in fact, simply can’t enter a local car showroom and purchase a new vehicle with a lump sum payment, and for this reason there are many credit options available. Over the last twelve months the volume of vehicles that have been purchased through credit options has risen by nearly 30%, which brings the total figure of cars that are owned outright to just 15%. There are many credit options available to people today and will all offer something different. However, not every person will be eligible for every type of credit arrangement. Your circumstances, financial history and disposable income are the main deciding factors for the credit that will be both available and suitable for you.

The Types of Credit Available

Hire Purchase Agreement: For this arrangement, a buyer will need to put down a deposit – which is variable – and agree on a monthly instalment amount, for a certain period of time. Once this time has expired you can either renew the contract or return the product, i.e., vehicle.

Contract Hire: Very similar to the option above, however with this form of credit once you have paid back the agreed amount then the vehicle will be yours to own, instead of having to renew your contract or return it to the lender. With this option, the payments will be higher and over a shorter period of time, typically 3-5 years.

You and Your Credit Rating

Your credit rating will be taken into consideration prior to any finance agreement, hire purchase or loan. People who have poor credit are likely to either be refused or have to pay a much higher amount of money than those with a better credit rating. For example, you could have one car valued at £5,000, which requires no deposit and a credit agreement over a period of 60 months. If you are classed as having an excellent credit rating then you would likely pay around £5,748.00. However, if you have a poor credit rating then you could be paying nearly double the cars value with a sum of £9,248.00.

If you are worried about your own credit rating, and what kind of arrangements would be offered to you, then why not check your Experian Credit Expert report? With Experian, you will receive unlimited access to your personal report and score. You will also be provided with valuable assistance to help you find the best deals given your rating. Experian can actually help you to improve your score, rather than just showing you what it is. This will mean that over time, you won’t be penalised with future finance options and can enjoy lower payments as well as working towards being debt free.