For most of us, financing a car will be one of the biggest investments we make.  Aside from a home, we put more time, effort and money into a vehicle purchase than any other item. And rightly so - it’s something that we use most days - travelling to work, ferrying children to school, and getting us to our chosen leisure activities.  For some, driving their car is their chosen leisure activity.  

With such a reliance on vehicles, it can be a real blow when things go wrong with the buying process.  That’s why it’s worth looking at different payment choices to provide the option of a  smaller outlay along with a degree of security. Although the final total paid will be more, finance deals can be the more attractive option for many.  

Indeed, in 2017, over 88% of UK car purchases, to the value of a staggering £44 billion, were completed using some form of finance agreement (FLA - Finance and Leasing Association).  

However, only those with the ability to juggle 0% balance transfers should consider using a credit card for a car purchase. The amounts involved could leave the buyer in serious trouble once interest rates kick in. In fact, many car dealers will either refuse credit cards or only accept part payment from them. Far more sensible are the two main finance options available to car buyers - Hire Purchase (HP) or Personal Contract Purchase (PCP).  

With these similar options, the cost of the vehicle (and interest and credit fee) is split into payments over a set period of time (48  months, for example), after which time the buyer owns the car (HP) or has the option of paying off the outstanding value  in order to buy the vehicle (PCP).

 

Aside from the benefits of smaller, more manageable, regular payments, often with little or no deposit, finance agreements with a reputable provider can offer additional advantages to customers over cash payments:With so many benefits of car finance, why would anyone want to use cash?

• FOS Assistance - The Financial Ombudsman Service is obliged to help with any purchase involving credit cards, HP or PCP. The FOS can intervene on the buyer’s behalf in any discussions with the dealer concerning vehicle fault or payment disputes.

• Share the Load - Any fault with the vehicle is the joint responsibility of the retailer and the finance provider who is obliged to help remedy problems or even refund payments.  This gives the purchaser two points of contact for grievances.

• Cutting Losses - The vehicle can be returned to the finance company (Voluntary Termination - VT) without affecting credit ratings at any stage, once a certain proportion (usually 50%) of the total cost has been paid off.  This can be a great help in preventing arrears or default on payments.

• Protection for Businesses Too - The FOS can now also step in where complications arise concerning finance contracts between vehicle dealers and small businesses or Micro Enterprises.  As long as the organisation has fewer than 10 employees and a turnover equivalent to no more than €2 million, the FOS is obliged to respond to complaints just as it would with consumer agreements.

For more information and advice on car finance options, take a look at the cars on offer at Motor Range or call into their Liverpool showroom for advice.