When you’re financing a car, it’s easy to get so caught up in the excitement of getting a new set of wheels that you rush through the paperwork. But this is the most important part of entering into a finance agreement, even if it’s not the most exciting!
There are a lot of things to think about before you sign the contract, from the payment terms to any damage charges that may apply. We’ve explored the top five considerations below:
1. Mileage Limit
Your contract will generally set out a mileage limit, which means you will only be able to travel a certain number of miles per year. You’ll need to stick to this limit if you want to avoid any additional charges. Bear in mind that these fees can be calculated using the number of miles you’ve exceeded the limit, anywhere from a few pence per mile to around 70p. So if you were to go over your mileage limit by 1,000 miles, you could be paying up to £700 in charges.
With these charges in mind, it’s essential that you work out how many miles you’re likely to do annually before signing the agreement. Think about whether your mileage is likely to change over time too – are you changing jobs soon, for instance, and have a longer commute?
The best thing to do when negotiating a mileage limit is to opt for a figure above what you expect to do. Even if this means a slightly larger upfront fee, it will give you peace of mind that you won’t exceed your mileage limit.
2. Payment Terms
One of the most important things you need to consider when it comes to your car finance deal is the repayment terms. Your monthly instalments will almost certainly be a fixed amount, so you can factor them into your budget. But, like with your mileage, you should consider whether anything is likely to change throughout the course of your agreement. Will your income stay the same, or will you have any additional expenditure? You need to ensure that the payments will always be affordable and comfortable for you.
It’s also sensible to discuss whether you’re able to change your repayment dates once the agreement is in place. For example, if you were to start a new job, you may wish to pay on a different date each month. It’s usually easier to confirm these sorts of details prior to the contract being signed, so make sure you do so before your agreement is active.
3. Wear and Tear Limit
Your finance agreement may have an allowance for wear and tear of the vehicle, but the definition of ‘reasonable’ wear and tear is hard to pin down. It’s therefore a good idea to have a conversation about this, making sure you’re on the same page when it comes to any damage to the vehicle.
Common damage includes dents in the bodywork and scratches on the paintwork of the car, as well as any holes or rips in the interior upholstery. The question is usually whether such damage is the result of normal usage, or if it exceeds that. You may have to get any damage repaired if you are due to return the vehicle at the end of your contract, if you believe it goes beyond regular wear and tear.
4. Service Requirements
While this may not apply to you, some car finance agreements expect you to get the vehicle serviced at specific dates and times. You may even be obligated to go to certain dealerships or garages to get the service done.
Make sure you discuss this with the dealer if your contract is a bit unclear, and see if there is any room for negotiation. You don’t want to be charged a fee simply because you got your car serviced a month later than you were meant to! And don’t forget to book the service as soon as possible, even if it is incredibly far in advance, putting the dates in your calendar. In these sorts of situations, it pays to be organised!
5. Other Policies
When discussing your contract, it’s good to ask about all the policies that do apply, or could apply to you. For example, check what the lender’s late payment policy is – would you be charged an additional fee? Are there any other penalties?
Some agreements also offer insurance policies alongside the vehicle finance agreement, which may be advertised as free. However, the payments for these could simply be included in your regular instalments, so delve into the terms and conditions to see if this works out the best option for you.
Other policies could include breakdown cover, or perhaps the option of guarantor finance. Whatever the dealer or lender is offering, make sure you investigate it thoroughly before signing on the dotted line.
Financing a Car Through Vehicle Finance Today
Before you get to the agreement stage, there are also a lot of things to think about in terms of car finance! Getting loan approval is something that many people worry about, but even if you have bad credit, there could still be options available.
Here at Vehicle Finance Today, we’ll do our best to connect you with a suitable lender, with which you meet all the basic eligibility criteria. Our application shouldn’t take more than a few minutes to complete, and you could be behind the wheel of your dream car in no time! Apply with us today with no impact on your credit score!
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