Whether you’re on benefits or not, cars are essential for everyday life. Whether you’re ferrying kids around, going to the shops or you’ve decided to visit that great-aunt at the other end of the country, a car is probably the best way for you to get around.
A considerable amount of time is spent inside your car, so you don’t want to scrimp on safety, reliability or aesthetics. This means that an older or previously used model may not be for you, but new cars are expensive. Especially if you are on benefits. But don’t worry, you can still get a shiny new car and here is some information about how you can go about it!
What is car finance?
Many people on benefits are not in a position to buy a car outright, so they may prefer purchasing on finance. There are many different types of car finance that can be used, but some are more difficult for people on benefits.
Personal Loan – Through a series of monthly payments over 1 – 7 years, you can pay back a loan that is given specifically for purchasing a vehicle. This method of payment means that you own the car, but these payments can be higher than other options. However, the total amount you pay is normally less than most other methods.
Hire Purchase – Again you make fixed monthly payments towards the car (after paying a deposit) over an agreed period of time. You will not own the car until the final payment, unlike a personal loan.
Car Leasing – Think of this like a video rental. You make fixed monthly payments to use the car until the contract expires, and then you give the car back (unless you are given the option of buying it at the end with a ‘balloon payment’). The payments are normally lower than other types of car finance but there is a mileage restriction.
But I’m on benefits, can I still get car finance?
Yes, you can! Being on benefits does restrict your options slightly but there are lenders out there who will finance a car for you. However, this sometimes means that you’ll have a limited choice on your car, higher interest rates and it depends on two things: 1) your credit rating and 2) your ability to pay.
If you have a poor credit rating, it can be challenging to get a car on finance. Work your way to building it up by making sure you’re on the electoral role and pay your loan and credit payments on time. To be sure that you’ll be accepted, request a copy of your credit report before you apply. That way you’ll have a better idea of where you stand.
Your total income (including combinations of benefits and wages) will be assessed against your other financial commitments. So before applying, work out your monthly incomings and outgoings and see how much you can afford to contribute to car payments each month. This is also good as you can work out ways to save a little bit of extra cash for other things.
In some instances, you may be able to get a guarantor for a loan. This is usually a close friend or loved one who is employed and will make payments for you if you cannot.
How does Perrys help?
The UK offers many types of benefits, so certain schemes have been developed to help people with their specific needs. Perrys belongs to a scheme called Motability that helps disabled people to use their government funding (aka benefits) to lease a new car. This scheme has been in place since 1978 and has helped over 3 million people gain independence through purchasing cars suited to their needs and their financial situation.
Through this scheme, recipients receive a brand new car every three years (including insurance, servicing and maintenance), with two named drivers, full breakdown assistance, annual tax disc, replacement tyres, windscreen repairs or replacements, 60,000 mileage allowance and many extra adaptions at no extra cost.
This scheme is invaluable for people on disability benefits, and other similar schemes have been created to help people who receive other forms of funding.
It’s now much easier to buy a car on finance if you’re on benefits. Perrys approve 9 out of 10 car finance applications, so contact your local dealership today and take a look at our brand new cars, as you could be driving off in one very soon.