Car Finance Traps & Potential Pitfalls To Avoid

Finance is the best way to purchase a car, not least because it staggers your payments over a sustainable, affordable long-term plan that allows you to buy your preferred vehicle without compromising other major ongoing payments that you are in the process of making or completing. However, the desire to get a vehicle on finance can sometimes blinker people enough that they lower their guard and miss some warning signs that could turn the dream car deal into a nightmare. In today’s article, we will be discussing some of the main traps and potential pitfalls that motorists should avoid at all costs (quite literally).

The first of these concerns what additional money you may end up paying out without you even realising it. In the event that the vehicle ends up in an accident that is not your fault, or if the car is somehow lost (again in a situation where it has happened out of your control), in a traditional situation where the vehicle has been bought on cash, the insurer would pay somewhere close to what you paid at the point of purchase. Under a finance plan, though, they will only pay what the vehicle is worth at that time (which could be several years into the deal), and in some cases, they might only pay a small fraction of what you had initially paid when you first bought the motor. There are options to consider in such situations, amongst them gap insurance, but needless to say that this can be an alarming discovery for motorists who find themselves in this predicament.

This is assuming that the accident has left the car unfit for purpose. In the event that the vehicle can still function, though, you could continue to drive it, but at a price. That’s because the value of the car will have dropped significantly now that the vehicle has been in an accident or lost and found in a damaged state, even though it is still fully operational to be used on the road. Again, there are ways to claim the difference back against the person who was responsible for the incident in question, but it serves as a reminder about how suddenly your vehicle can see a significant drop in its overall value.

One final point to bear in mind is especially important for a student or for somebody who tends to move home every few years. If you happen to change your permanent home address at any point (even if it’s during the final stages of a finance plan), it is absolutely essential that you inform all parties involved in your deal. Even if you are still keeping up your regular payments with no problems, not telling your dealership and finance company about your new address could lead to legal problems that result in a huge bill and the potential loss of your driving licence. Regardless of the circumstances or the timing, if you move house during a finance plan, you simply must tell all relevant companies to prevent unwanted consequences.

These are all hypothetical scenarios, though, and so long as you bear these thoughts in mind rather than having them hang over you like a black cloud, then things will be just fine and you will reap the full benefit of the car you have bought on finance. Find out more on this page

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