The truth behind car finance myths

Today, most cars in the UK are bought through finance deals, creating an industry worth over £40 billion that continues to grow. Despite its popularity, however, there are myths about car financing that leave consumers confused and unsure if this is the right type of deal for them. This article looks at some of those myths and the truth behind them.

You can’t pay off your deal early

This isn’t true. You can pay off your finance deal at any time during the life of the contract. You may be liable for early payment charges or penalties, however, so ensure you read the small print.

Finance is only available through car dealerships

While this might once have been the case, now you can get financing through other finance companies as well, letting you shop around for the best deal. Make sure car financing is right for you, whether you choose Leicester car leasing or personal contract purchase in Pontypridd.

You negatively affect your credit rating

Applying for multiple finance deals in a short period may be a cause of concern to lenders who subsequently look at your credit score, having an impact as a result. Use soft credit searches until you are sure of your choices. You could also look to specialists – firms such as offer car leasing in Leicester – in order to identify the best deal. Once you have a deal, making payments on time can positively impact your credit rating, lowering your credit risk.

Financing is only available on new cars

While this was once the case, some finance companies will allow you to buy used cars through finance deals, giving you many more options when it comes to buying a vehicle.

Getting financing is slow

Again, this was once true but, thanks to the growth in online systems, it’s no longer the case. Now, you can often get a decision in five minutes or less.

You need a deposit

This really does depend on who is financing your purchase. Some borrowers do require deposits, others don’t. What they look at instead is your ability to make payments. If you do pay a deposit, there is a myth you will get it back. This is not true. You will be liable for a balloon payment, however, and should plan for this.


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