A recent and continuing increase in car finance available even for those with a poor credit record is a signal that higher employment rates along with increased pay across the country has boosted consumer confidence. This can only be good news for those with bad credit who are seeking to sort out a car loan, with the cost of borrowing being low at the moment compared to previous years.
The truth is that no one ‘does’ debt better than the British. Sometimes it seems we’d much rather borrow and then worry about repayments later, than make a purchase outright, that we can easily afford.
Still, we are what we are, and in all likelihood it will always be so. Of course, most house purchases are achieved over time, on a mortgaged or part rent-part buy basis. But what about cars?
Car finance for private buyers
How do you get a car? Well, you might be given one as present (what a result! As long as it’s not a moss green Robin Reliant with no gear stick, or a rusty old yellow Cinquecento that is), you might inherit a vehicle, a company car might come as part of your package at work, or you may simply pay hard cash for a new or used motor, leaving things like road tax, insurance, MOT and servicing to pay for, not to mention petrol or diesel. If none of those options are available to you, buying a car over time on a finance deal might still be possible.
How many cars do you think were bought on finance last year across the whole of the UK? 300,000? 400,000? Half-a-million? No, the answer is a staggering one million cars. And with over £12 billion worth of motors gracing our roads, country lanes, dual carriageways and motorways, that’s a lot of road tax being spent as well as an absolute fortune on petrol, making car financing something the Treasury is more than happy to encourage. It also makes sense for lenders to show flexibility when it comes to considering applications from those with bad credit. After all, if everyone with a poor credit rating was refused a car loan, that would be bad for business overall, for the motor industry and the country’s coffers.
And, don’t forget, car loans are not only available to private buyers…
Companies also buy fleet cars on finance, don’t forget; sometimes amounting to as many as a hundred vehicles for staff usage. Without the option to pay monthly, how many companies could realistically afford to get their employees on the road? Business owners across the UK are wise to take full advantage of the car financing option, whether at business set up stage or later.
The future’s bright
With all this, it’s no wonder that in 2015, new car sales (bought on finance) increased by ten per cent; and this number includes business-registered vehicles. And with consumer confidence looking to increase this year, that figure could almost double by the end of the year.
A well looked after, lovely little runabout with alloy wheels, electric windows, sunroof and tow bar for Christmas anyone?