Before starting any finance contract, you should consider if you can afford the monthly repayments. Once you have signed up to a finance contract, it can be difficult to end the agreement early. It is a big financial commitment. You should work out what you can afford each month on a car.
Remember to add up all the running costs:
- Insurance
- Car tax
- Fuel
- Maintenance.
Consider the other outgoings you need to pay each month such as rent or mortgage payments and utility bills. You need to have enough spare income to afford the repayments.
More information on credit and car finance.
Your ability to afford the repayments is one of the key factors that lenders use to check if they should give you finance. The lender may ask you to provide proof of income and outgoings to secure your car finance. This depends on your credit rating.
When looking at your ability to afford car finance, you should think about the following:
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The length of the contract
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Your regular income
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Any other financial commitments you have now or may have in the future
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Changes in your personal circumstances that may have a financial impact
The finance would not be suitable for you if you can’t make your repayments out of your regular income and/or savings. You should not have to borrow more money or sell assets.
You should inform the dealership and the finance provider if you become aware of the following:
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A change (or possible change) in your financial circumstances
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Any changes in your health or relevant health information that may impact your finances