Vehicle finance is a topic of interest for new car buyers. According to Answer the Public, a consumer insight portal, consumers usually have around 42 common questions about auto finance. The searches revolve around van contract hire for businesses to vehicles for personal use.
Today, we will provide you answers about five main queries related to vehicle finance:
What is Vehicle Finance?
Vehicle finance lets you cover the cost of a vehicle over an agreed period of time instead of paying the whole sum at once. It comes as a blessing for those who have a small budget to acquire vehicles.
Who is Eligible for Vehicle Finance?
The eligibility criterion depends on the lender and your current situation. Hence, there are no predetermined rules that apply to every applicant.
That being said, it is fairly easy to find a loan option that suits your requirements thanks to the number of different choices offered by the lending firms. Here are some financing options:
- Hire purchase agreement:
Often abbreviated to HP, in this arrangement, the buyer first makes a down payment. Then they have the leverage of paying off the remaining balance through monthly instalments.
- Personal contract hire/Personal leasing:
Also known by the acronym PCH, this financing option lets the buyer lease a vehicle for a predetermined time period. At the end of the deal, the vehicle is returned to the dealership or financing institution.
- Personal contract purchase (PCP):
PCP is a mix of HP and PCP. Under this agreement, a deposit is paid for the vehicle and the remaining balance is paid via month-wise repayments. At the end of the agreement, the buyer has three options available:
- Keep the vehicle
- Exchange the vehicle for a newer one
- Return the vehicle
How Quick a Vehicle Finance is Approved?
A vehicle loan request normally takes 48 business hours to get approved. The creditor considers the following before granting the loan:
- The loan meets all your needs and purposes.
- That there isn’t any major hazard of the loan placing you in any financial constraint immediately.
- That there isn’t any danger of the loan placing you in any financial hardship during your loan term.
What are the Requirements for Vehicle Finance?
The lender checks your credit score and offers the finance accordingly. The dealership will ask you to bring the following with your vehicle finance application:
- Your driver’s license
- Your insurance card
- Your two latest pay slips
- Proof of residency: for instance, a service bill which has your name imprinted on it.
- A rundown of references: Every reference must be listed clearly with their name, address and contact number. Furthermore, the list should not include any of your family members.
- Trade reports you need to submit: it must have a title and registration.
Transferring Vehicle Finance
It is very common to replace an old vehicle with a new one carrying an outstanding finance. While, there is no easy way around it, below are some possibilities for you:
- Return the loan early:
When you pay off the loan, the ownership title completely passes onto you. After that there are no restrictions and you can purchase any vehicle. Ensure that you have acquired the document of loan settlement from your creditor.
- Ask if the dealer could help you with load settlement:
Many dealerships have the license to process your current vehicle loan, if you purchase the new vehicle from them. If this facility is available then the settlement value will be transferred to the new loan agreement.
- Obtain security through the Halves & Thirds Rule:
If you want the authority to terminate your loan contract voluntarily, then this rule can do just that. But for this, at least half or two-thirds of the total amount borrowed (including deposit and payments) must have been paid.