How To Pick Your Car Finance Company

by Marsh Finance on Aug 30, 2024 3:20:42 PM

Key Summary

Car finance companies loan you money to buy a car. The finance company owns the car until all payments have been made. Once you have chosen a car, you have different finance options to choose from. At all points, you will deal with a car finance company. They will support you at every step of the car finance journey.

Need a new car but don't have the full price? Car finance is a popular way to get the vehicle you want without paying for it all upfront. Let's break down how it works and what you need to know.

What is Car Finance?

Car finance is basically a loan that helps you buy a car. You borrow money from a finance company, and then you pay it back in monthly instalments. The company owns the car until you've paid it off.

Car Finance Lenders, Brokers, and Dealership Finance: What's the Difference? 🔍

When exploring car finance options, you'll often come across the terms "lender," "broker," and "dealership finance." Let's break down what each one means:

Car Finance Lender

A car finance lender (Like us!) is the company that gives you the loan. They could be a bank, a credit union, or a company that only does car loans. When you borrow money for a car, whether it's with a broker or dealer, it's the lender that your agreement will end up with.

Car Finance Broker

Brokers work with lots of different lenders. They know what offers are available and can help you choose the car finance agreement that's right for you.

Dealership Finance

Car dealerships often have a panel of car finance lenders. This means you can apply for a loan directly through the dealership! However, your actual loan agreement will be with a car finance lender.

A woman sat in a car at a car dealership with a car salesman passing her the car keys

What Do Car Finance Lenders Do?

Car finance companies, also known as lenders, play an important role in the car buying process. They provide loans that allow you to purchase a vehicle without paying the full price upfront.

When you apply for car finance, whether through a dealership, broker or online, you're entering into an agreement with a finance company. This agreement outlines the terms of the loan, including the amount borrowed, interest rate, and repayment schedule. The finance company retains ownership of the car until you've made all the required payments, which typically range from 12 to 60 months.

The UK boasts a large range of car finance companies. Some specialise in helping customers with poor credit. These companies often have more lenient credit requirements but may charge higher interest rates. On the other hand, companies that focus on good and excellent credit typically offer lower interest rates and better terms.

Is It Better To Apply For Car Finance Directly With A Lender?

Going directly to a car finance lender can be a good option.

Lenders often offer better deals if you apply to them directly. This can save you time and money, as you're not dealing with a middleman. However, you'll only get offers from one lender. So, it's a good idea to compare different lenders before making a decision.

Did you know that you get a car finance quote without impacting your credit score? Get your quote below 👇

Get Your Quote 🚀

Topics: Latest Car Updates & Advice

Share this