Money and Cars

Money and Cars

At VCARS.co.uk, we want to make buying a used car as enjoyable and easy as possible. We are aiming to take as much of the guesswork out of buying a used car – in fact, we’re aiming to take out all of the fuss. Read the answers to these four question and you’ll feel more relaxed and informed about your next car purchase (hopefully from VCARS.co.uk)

I currently have a car, what should I do first?

If you currently have a car and you’d like to sell it, find out how much it is worth both as a private sale and as a part exchange.

How do I work out how much to spend on a used car?

Might seem strange, but let’s start at the end. The first question you’ll need to answer is how much will my car cost to run? As most of us are paid monthly, the best way to calculate this is… monthly.

To get a rough idea, add the following bits of information together..

Car Cost Equation

 

If your final figure is more than you can afford, you could search for the same or similar model with a smaller engine. This can often reduce tax, fuel, insurance and maintenance costs.

I need a loan to buy my car, what advice can you give me?


First of all, shop around! By shopping around you might get better rates. Study the APR (Annual Percentage Rate or interest). A lower APR over a longer spell always sounds nice but often costs more in the long run. Do your sums.

Are there any additional payments? Set-up fees? Early repayment charges? Also, remember, taking out finance with a dealer can earn a better price on the car. So haggle.

There’s a lot of jargon out there, so let’s talk you through some types of loan.

Unsecured Personal Loan (UPL)
  1. This is a loan based on your ability to make repayments. None of your assets (car, house, jewellery, Panini sticker album) are used for security – you won’t lose them.
  2. The monthly repayments and loan length are agreed at the time you buy the car.
  3. The car is yours and can be sold at any time but repayments continue for the agreed length.
  4. Very often, UPLs incur a penalty payment if you pay them off before the agreed length.
  5. You can choose a flexible UPL which allows you to take a break in repayments/repay the loan early without penalty.
Secured Loans
  1. When you’re considering borrowing larger amounts over longer periods, you can secure a loan against assets – usually your house.
  2. This often allows lower monthly repayments than UPLs
  3. If you can’t make the repayments your assets can be repossessed. So be careful.
Personal Contract Purchase (PCP)
  1. With a PCP you make a big first large, followed by a series of monthly payments and a (if you want to)final large payment. This allows you to buy a car with lower monthly repayments by postponing a large amount of the total cost.
  2. When the final payment is due you can either: pay it and keep the car/hand the car back and walk away from the deal/use the value as part exchange.
  3. Remember: You don’t own the car until the final payment is made, you can’t sell it until then, and going over an agreed mileage will incur costs.
  4. Some PCPs include car maintenance. It’s a bit complicated, but it might be for you.
Hire Purchase (HP)
  1. Simply buy your car with fixed monthly payments.
  2. You might have to pay a deposit
  3. Bigger deposit = smaller monthly repayments
  4. You own the car when the last payment is made, not before.

How can I protect my credit score?

If you’re taking finance, you might need to boost your credit score. Lenders calculate a credit score based on a history of your credit cards, mortgage, repayments, mobile phones, bills, debt, electoral roll data, court records etc.

Sometimes there are things negatively affecting your credit history that can be removed. Check your score online to find out.

If you’ve got any question or comments, or anything you think we’ve missed, please leave a comment below.

 

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