10 Reasons to Finance Your Next Car

Purchasing a new or used car might be one of the most expensive investments you’ll make in your lifetime. It involves lots of research, comparison and budgeting. But once you’ve found that dream car, the next big step is working out how you’re going to pay for it. 

Whilst some people will have the cash readily available to buy their new car outright, for many buyers finance may be the smarter choice. In this article, we'll explore 10 reasons why financing your next car might be the right decision for you.

What is car finance? 

Without going into too much detail, car finance is a financial arrangement that allows you to purchase a car by spreading the cost over a specified period of time. It involves borrowing money from a lender in the form of a loan and repaying it in manageable monthly instalments over an agreed timeframe.

In order to borrow this money, however, you must first complete an application form — including a credit check. If approved, the car dealership will receive the money for your purchase and you will begin to pay back the lender with a pre-agreed interest rate applied.

10 reasons why you should consider car finance

1. Spreads the cost over time 

The main benefit car finance offers is the ability to spread the cost of a vehicle purchase over an extended period of time — typically between 2 and 5 years. This means you avoid paying that big lump sum, in turn, making the purchase much more affordable and preventing you from wiping out your savings. 

2. Helps you manage your cash flow 

Not only does paying in monthly instalments for your car mean you avoid that large one-time hit to your bank balance, but it’s also a great way to help manage your finances better. Those savings of yours can be put aside for a rainy day, and since the monthly price you pay is fixed and consistent, you’ll know how much it will be and when it will need to be paid. 

3. Improves your credit score

Assuming you are good at making your payments on time and in full, financing your next car can also help you improve your credit score. It demonstrates to lenders that you are financially responsible and trustworthy which can open up opportunities for better financing options in the future. 

4. You may be able to afford a better car 

Since you’re not paying the full price of a car upfront and spreading the cost over several years, financing will allow you to afford a more expensive, higher-quality car — given it fits within your budget. This means you can get additional features and options that enhance your driving experience. 

5. Get the car you want sooner 

Instead of saving up for years to buy your dream car, financing allows you to pay over time through much smaller, manageable monthly instalments. This means you don’t need that big wad of cash available already, so you can get the exact car you want now! Just make sure you can comfortably manage the payments throughout the entirety of your contract.  

6. Easily upgrade your car 

If you often get bored with your car quickly, or something else usually catches your eye, with the right financing option you can easily upgrade your car without the hassle of selling your old one. With a personal contract purchase (PCP) option at Carlingo, for example, you can choose to part-exchange your car for another on a new agreement. 

7. Flexible buying options

Car financing offers various payment options. You can choose from different types of financing — such as those offered by Carlingo including hire purchase (HP) or personal contract purchase (PCP) — as well as choose the length of your contract, the deposit size, and your monthly payment amount. Altogether, you’ll be able to find a package that meets your wants and needs. 

8. Get tax benefits 

If you are self-employed, or run your own business and purchase your finance under your business’s name, then you may be eligible for tax deductions. The type of tax deductions will depend on the method you choose to finance your vehicle, so be sure to do your research before jumping straight into it. 

9. You can make money on your car 

If the car you purchase using finance retains its value well, you’ll be able to benefit from asset appreciation — let us explain. When you finance a car, specifically with PCP, at the end of the agreement you’ll have three options: return the car, part exchange it for another, or pay the pre-agreed final repayment to own the car. 

In the case of the latter, if the value of your car has increased, it’s possible that you’ll be able to sell it on for a higher price than the pre-agreed repayment, thus, pocketing the difference as profit. 

10. Zero deposit options are available

You might be thinking, “I’ll be avoiding the large upfront cost of buying the car, but I’ll still need to fork out the deposit, right?” Wrong! There are zero deposit options out there which means you won’t have to pay any kind of lump sum if you don’t want to.  

Finance your next car at Carlingo 

If you find yourself convinced by these several reasons to finance your next used car, then you’re already in the right place. At Carlingo we offer quick and easy finance options at competitive rates so that you can drive away with your dream car that fits your budget. Don’t forget to make use of the finance calculator underneath each of our used car listings to find out what each car may cost you.