The process of making a car finance agreement can be somewhat daunting for those who assume that a purchase is nothing more than spotting a car that you like and just paying for it outright. A lot of important factors need to be considered to ensure that an agreement is made which is beneficial to all, from your financial situation to how long you’re hoping to keep the car (and whether you wish to own it for years to come, or if you’re happy to simply hire it).
For young adults who may have recently passed their driving test, or are simply in a strong enough financial position to make their first vehicle purchase, car finance can seem even more daunting than usual. It’s the first time that they will have entered into such a long-term agreement which could potentially last for many years (unlike university accommodation, which would have a specific end period). Therefore, it’s vital that they take the time to properly consider how car finance works, and the various options available.
A young person has to really think about how much they will be paying out. I remember when I was getting my first car, it was a similar experience as when I was adopting George my cat. It’s one thing for a long-time employee or a home-owner, who knows that they are earning strong, consistent wages and have been for a number of years, making any car finance agreement fair and feasible. For somebody who is entering the workplace for the first time, or who are just beginning to make real money, such a plan cannot put them in financial peril. The customer has to understand that they will be paying this set amount for several years and that they literally cannot afford to skip payments. As appealing as it sounds to try and show off their new car to friends and family, it can’t be at the expense of their financial well-being. It’s possible that the bank or another provider will request a copy of your most recent payslip, as this will go some way towards increasing their confidence and paving the way for a logical and fair financial agreement.
On a related note, a new driver shouldn’t just take the first deal that they see, or automatically jump into a deal for a car without pondering the terms and conditions. There are a wide variety of cars available, which means that there is also a multitude of finance deals on offer. It’s easy to be tempted if one particular car stands out, but by taking the time to look across the range, or at the very least to weigh up the different payment options for that model (which could be based on mileage, petrol/diesel power, or even the release date of the vehicle), you can find yourself a much better deal, and one which allows you to enter the world of driving in a safer, more cost-effective position.
Add to that the different car finance plans that we have outlined in a separate blog (PCP for Personal Contract Purchase, PCH for Personal Contract Hire, HP for Hire Purchase and PL for Purchase Loan), and it’s clear that a young adult has a lot to think about when entering their first purchase plan, as opposed to picking out a car and hoping to be driving it away within a couple of hours. Yes, you’ll want to be on the road as soon as possible, but it’s crucial for you to take the time to develop a proper understanding of car finance, the options available, your circumstances, and the small things you can do to bag yourself the best deal available. Of course, here at Accept, we will work with you every step of the way, making sure you end up with a great car and a fair, sensible finance plan.