Affording a new car, that’s an upgrade on your previous vehicle, and has little to no mileage on it, is a big deal. Cars are getting more and more expensive as the years go on, and the value of secondhand markets are going up because of it. There is no right or wrong time to buy a new car, and if you feel like it’s time to invest in a new vehicle for your needs, whatever they may be, you’re probably wondering what your chances of buying one outright are. Well, unless you now for sure, there’s a good chance your outright buying chances are low, so let’s go through the alternative financing options available to you below.
What’s in Your Savings?
First, you need to think about your savings. Having a sizable savings account is the number one way to buy a car outright, but only if you can still have money left for an emergency fund – this is between 3 to 6 months worth of your regular salary.
Even if you can’t afford to buy the car in full with your savings, you can use it to put down as much of a deposit as possible. This will make any loans you take out easier to repay, and it’ll make using your credit card in tandem quite beneficial here.
Turning to Purchase Loans
You also have the chance to take out purchase loans here, of which there are two main varieties. Hire Purchase (HP), which is secured against the car, and Personal Contract Purchase (PCP), which carries low monthly repayments. They both have their own pros and cons – for example, if you can’t put down the biggest deposit possible, a PCP will be best for you, rather than an HP. And you can go through a full walkthrough of both right here.
If You’re Working with Bad Credit
Having bad credit can ruin your chances of obtaining an auto loan, especially in the form of a personal loan. Trying to apply at a bank or other lender for one of these, when you have a credit score of 500 or lower, might completely ruin your chances of affording a new car. You’ll also want to be able to keep up with the repayments, as securing such a loan against your home just isn’t worth it at all.
However, affording a new car isn’t ruled out completely. There are bad credit car finance options out there for you to look into, but they might require you to rethink your car budget. You probably won’t be able to afford anything over the price of £8000 using a loan like this, but of course, every situation is different. Just keep this option in mind if you’ve no other way to pay.
Redefining your chances of affording a new car takes a lot of research. You could use your savings in a variety of ways, and there’s always a financing option out there depending on your current financial circumstances.