Owning a car is convenient, and makes your life so much easier, but getting the finances together to purchase a vehicle is not always simple. This is where car finance comes in. There are various types of car finance you can choose from to help you spread the cost of your chosen car over an agreed term, to suit your budget. There are options to suit everyone, from hire purchases to car finance with defaults. Read on as we take a look at some of the most popular types of car finance, and how to get the best deal to suit you. 

Types of car finance 

There are a few different types of car finance that you can choose from, depending on your financial situation, and what suits you best. Here are some of the most popular types of finance that can help you get a reliable car, that suits your budget. 

• Hire Purchase: This type of finance allows you to put a deposit towards the car, and then pay further monthly payments until the total is paid off. An HP agreement means you can pay for your car in more affordable chunks and own it at the end of the agreed period. 
• PCP: Personal contract purchase allows you to pay a small deposit to obtain the car, and pay a set amount each month to use it. At the end of the term, you can give the car back, swap it for a new model, or make a payment to own it.  
• Personal loans: This type of loan means you can obtain the full amount to buy your vehicle outright, and then pay back the loan from your lender each month.  These loans are not secured against the car themselves, but loans may be harder to be approved for if you have a bad credit history. 

Car finance for bad credit 

Whilst buying a new car should be an exciting time, for some of us, it’s not that easy. If you have a bad credit history – you’ve struggled to pay off loans in the past, and your credit score has plummeted as a result, you may not be approved by traditional finance lenders. But it’s not all doom and gloom, there are lenders that can help you when you need it most. Some cCar finance lenders for bad credit base their approvals on whether you can afford the finance payments, rather than your credit score. So, if you can provide evidence that you have a regular income, and can afford to pay your finance each month, you’re likely to be approved for the finance you need, and a reliable car to get you from A to B.  

How to get the best deal 

When you apply for car finance, especially if you have a bad credit history, there are factors to think about – like interest. When you have a bad credit score, interest is usually increased as lenders need to ensure they will get their money back. This can make monthly payments more expensive. To get the best deal on your finance options, there are a few things that you could do to ensure you keep the costs down, such as…

Pay bills on time 

Making sure you pay your bills on time can have an impact on your car finance deal. If your lender sees that you are struggling to pay bills you already have, or you’re struggling to manage your debt, this could have an impact on their decision, and the amount of interest you’ll need to pay, ultimately raising your monthly payments. Stand yourself in the best position by showing your lender you can manage your money. 

Don’t max out your credit 

Another factor that can have an impact on the way your lender sees you is how much of your credit you’re using. If you have a credit card that’s reached its limit, this automatically shows your lender that you’re desperate for additional funds, which makes you look like a less trustworthy borrower. Keep your credit usage low to help you negotiate more affordable car finance. 

Improve score 

Whilst you can take advantage of car finance for bad credit, to stand yourself in a better position in the future, you should try your best to improve your credit score. Not only will this help you when it comes to applying for other types of finance, it means that you will be able to negotiate some of the best terms to suit you and your budget. Make a plan to pay off debt and manage your money wisely so you can get the financial help you need when you need it.