These days, affordable car finance options are by no means limited to applicants with flawless credit histories. In fact, there are more subprime car finance options available in the UK than ever before.
Buying a car with a poor credit score can be a daunting prospect. Particularly if you’ve already been turned down elsewhere, you could reach the conclusion you’ve been counted out of the running. In reality, this isn’t necessarily the case at all.
Whether you’ve got your sights set on an executive vehicle for business purposes or a simple family run-around, there are options available to suit all budgets. It’s simply a case of establishing your requirements using a car finance calculator, before contacting a specialist poor credit car finance agency.
But what are the options available for poor credit applicants? Assuming you’ve decided against (or failed to qualify for) a traditional loan, how can you affordably finance the purchase of your next vehicle?
Hire Purchase (HP)
One of the most popular options among UK motorists is hire purchase (HP). This is the ‘classic’ way of financing a vehicle purchase, wherein the buyer pays a deposit to receive the car in the first place, followed by a series of monthly repayments. When the total balance has been repaid – usually after 2 to 4 years – the customer becomes the legal owner of the vehicle. In the meantime, it remains the property of the financer.
The obvious benefit of hire purchase is no need to come up with the cash to pay for the vehicle outright. In addition, monthly payments and general repayment terms can be highly flexible, and HP finance is often open to poor-credit applicants.
Personal Contract Purchase (PCP)
Similar to hire purchase, a personal contract purchase (PCP) agreement involves an initial deposit and a series of monthly repayments. In this instance, the main difference is that the customer has three options to choose from at the end of the term.
They can upgrade to a newer car and continue paying the same monthly fee, take ownership of the vehicle by making a final payment to the service provider or walk away from the deal with nothing more to pay. The flexibility of PCP has made it a popular choice among commercial borrowers and everyday applicants alike.
Last but not least, leasing is not without its benefits. While leasing eliminates the prospect of owning the vehicle outright, it can also open the door to the lowest possible monthly repayments. Often up to 60% lower than the payments on a hire purchase deal.
In addition, the customer doesn’t have to worry about any repair or maintenance costs whatsoever. Like the two options listed above, leasing is usually a viable option for applicants with poor credit histories.
Making the Right Choice…
With such an extensive range of options to choose from, it pays to consult with an independent broker. This can help determine both your eligibility and your requirements, before you compare car finance from dozens of specialist lenders across the UK.