Whether you live in France, the UK, or the US, if you want to add a new car to your home, one of the most popular ways to do that is with car financing. This allows you to buy your dream car without needing to pay a hefty bill upfront. Great!
Of course, with so many options for car finance available, from hire purchase to personal contract purchase (PCP), there are a lot of misconceptions and mistruths online.
This can make finding the ideal car finance option difficult, not to mention puzzling! So, fasten your seatbelt as here, you will be walked through the most common misconceptions that exist about car finance. Enjoy!
Myth 1- Paying Cash Is Better Than Financing
If you have the cash to pay for a car, great! Is it better than paying for a car with financing, though? A car finance calculator will show that when it comes to paying for a car with a loan, the benefits include being able to buy a wider range of vehicles, building your credit score, and, of course, having some money left over for other things in life! Obviously, if you are one of those lucky people who can pay for a Ferrari with cash and still have money left over, great, but for the average person, that just isn’t attainable.
Myth 2- You Have To Get Finance Through a Dealership
If the car dealership you are buying from offers you finance, you are not obligated by law to take it. You can (and should) shop around for better car loan deals, which may help keep the monthly payments down, helping you budget. Some dealerships will give commissions to the salesperson who signed you up for the finance, so it’s a bit sneaky!
Myth 3- Bad Credit Means No Car Finance
It is true that lower credit scores will usually equate to higher interest rates, but overall, having bad credit will not prevent you from getting car finance. Many companies that sell cars will also look at other factors besides your credit score, such as your employment status, your income, and whether or not you have other loans. This will help them to assess if you would be suitable for the car loans that they offer.
Myth 4- Car Finance Is More Expensive In The Long Run
This is one of the most common myths. Yes, you will incur interest on the loan, but you need to think about the bigger picture. Most things today, from homes to motorbikes, are bought on finance, and, aside from the interest rate that is given, you won’t be paying more in the long term.
Myth 5- You Can Only Get Car Loans If You Are Over 21
This is a big myth that prevents younger people from taking out car finance. It may be the case that where you live, it is not possible to take out car finance before the age of 21, but for many lenders, you can apply for a car loan when you hit the age of 18.
