LIBER FINANCIAL HELP CENTRE

The short answer is YES! In most cases, you absolutely have the option to pay off your car finance ahead of schedule. It’s important to remember that car financing agreements can differ, so it’s best to review your specific contract or consult with your lender for accurate information.

However, let’s shed some light on the potential benefits and considerations that come with early car finance repayment.

BENEFITS OF EARLY RE-PAYMENT

Interest Savings: 

By paying off your car finance early, you can significantly reduce the amount of interest you’ll ultimately pay over the loan term. It’s like unlocking a financial bonus by avoiding unnecessary interest charges.

Improved Credit Standing:

Demonstrating responsible financial behavior by paying off your loan early can positively impact your credit score, showcasing your reliability to future lenders.

Financial Flexibility:

By eliminating a monthly car payment, you gain the freedom to allocate those funds toward other financial goals or investments. It’s a step towards achieving greater financial freedom.

CONSIDERATIONS BEFORE PAYING OFF EARLY

Prepayment Penalties:

Some financing agreements may include prepayment penalties or fees. It’s crucial to review your contract to understand if any additional costs apply when paying off your car finance early.

Future Financial Obligations:

Ensure that paying off your car loan won’t hinder your ability to meet other financial commitments or goals, such as saving for emergencies, retirement, or future purchases.

ADVICE

As with any financial decision, it’s wise to consult with your lender or broker before making a move. They can guide you through the specifics of your loan agreement, including any potential implications of early repayment.

In summary, the ability to pay off your car finance early can be a fantastic opportunity to save money, improve your creditworthiness, and gain financial flexibility. Nonetheless, it’s important to evaluate your specific situation and make an informed decision that aligns with your overall financial goals.

If you have any questions, feel free to contact us.

At first glance, it may seem counterintuitive to apply for car finance without a driving licence. After all, a valid licence is required to operate a vehicle.

However, in some cases, individuals who don’t possess a driving licence still wish to access car finance for various reasons.  They might have a designated driver, or plan to use the vehicle exclusively for commercial purposes.  Additionally, car enthusiasts who are passionate about collecting cars but don’t drive them may seek financing options.

Several lenders and financial institutions are recognising this demand and adjusting their offerings accordingly. They understand that owning a vehicle goes beyond solely being behind the wheel and are exploring ways to accommodate those without a driving licence.

While requirements may vary, some lenders consider alternative factors, such as credit history, income stability, and employment status, when assessing loan applications.

If you find yourself in a situation where you need car finance but lack a driving licence, here are a few steps you can take:

Research your options

Explore lenders who offer car finance solutions for individuals without driving licences. Check their eligibility criteria and loan terms to find the best fit for your needs.

Build a strong credit profile

Focus on establishing and maintaining a solid credit history. This can enhance your chances of securing car finance, even without a driving licence, as lenders often prioritise creditworthiness.

Provide alternative documentation

Be prepared to furnish additional documents that highlight your financial stability, such as proof of income, employment contracts, or utility bills. These can support your case and demonstrate your ability to repay the loan.

Remember, it’s crucial to consult with financial experts, like an independent car finance broker regarding their specific requirements. Each situation is unique, and obtaining professional advice can help guide you in the right direction.

If you have any questions, feel free to contact us.

This is an important consideration for those planning to purchase a car while also aspiring to become homeowners for the following reasons;

Credit Impact

When you apply for car finance or any loan, lenders assess your creditworthiness. Credit scores play a significant role in mortgage applications. Taking on additional debt, such as car finance, can potentially impact your credit score, which is an essential factor for lenders. Maintaining a good credit standing is crucial for increasing your chances of mortgage approval.

Affordability and Debt-to-Income Ratio (DTI)

Mortgage lenders evaluate your ability to manage debt by analysing your debt-to-income ratio. This ratio compares your total monthly debt payments to your monthly income. Car finance adds to your monthly debt obligations and may increase your DTI. If your DTI exceeds the acceptable range, it could potentially impact your mortgage application.

Loan Affordability and Stress Testing

Mortgage lenders also conduct stress tests to ensure borrowers can afford their mortgage payments even if interest rates rise. When assessing affordability, they consider your income, existing debt payments, and potential future financial obligations. Car finance payments can affect your overall affordability and may impact the amount you qualify for in a mortgage loan.

Documentation and Approval Process

Applying for car finance and a mortgage simultaneously means managing two separate loan applications. Mortgage lenders have specific documentation requirements, such as proof of income, employment details, and bank statements. Coordinating and organising the process effectively can help avoid delays or complications during the approval process.

Long-Term Financial Goals

It’s essential to consider your long-term financial goals when making decisions about car finance and a mortgage. Taking on additional debt may impact your ability to save for a mortgage deposit, build an emergency fund, or contribute to other financial objectives. Balancing immediate transportation needs with your housing goals is important to make informed choices.

In conclusion, car finance can potentially impact your mortgage application, considering factors such as credit score, debt-to-income ratio, loan affordability, and stress testing requirements. Seeking guidance from a independent broker who understands the market can help to navigate this process successfully.

Responsible financial management is key to maintaining a strong financial profile, for all borrowing.

If you have any questions, feel free to contact us.

Whether you’re a seasoned car enthusiast or a first-time buyer, demystifying this process will help you make informed decisions and secure the best deals.

KEY FACTORS 

Interest Rates

Interest rates play a significant role in car finance calculations, as they determine the cost of borrowing. These rates can vary based on factors like your credit score, loan term, and the lender’s policies. Keeping an eye on interest rates and comparing offerings from different lenders can help you find the most favourable terms and save money in the long run.

Loan Term

The loan term, or the length of time over which you’ll repay the car loan, is another crucial factor. Car finance terms generally range from 12 to 60 months, although longer terms may be available in some cases. Shorter terms typically mean higher monthly payments but lower interest costs overall. Assessing your financial situation and finding the right balance between affordability and interest savings is key.

Deposit

Paying a deposit is an important consideration when calculating car finance. By putting down a larger sum upfront, you reduce the amount you need to finance, potentially leading to lower monthly payments and overall interest. Keep in mind that the minimum deposit required may vary depending on the lender and the specific financing option you choose.

Balloon Payments

Some car finance options include balloon payments. This means you make lower monthly payments throughout the loan term, but a larger “balloon” payment is due at the end. Balloon payments can be attractive if you anticipate having additional funds available in the future, but it’s essential to carefully consider whether this option aligns with your financial goals and circumstances.

Additional Costs

When calculating car finance, it’s crucial to consider additional costs beyond the loan itself. These include factors like insurance, road tax, maintenance, and potential servicing fees. Factoring in these expenses from the beginning helps you plan your budget effectively and ensures you’re prepared for the total cost of car ownership.

ONLINE TOOLS 

Fortunately, various online tools and calculators are available to help you estimate car finance calculations. These tools consider factors such as interest rates, loan terms, deposit amounts, and balloon payments to provide you with an approximate monthly payment amount. Leveraging these resources empowers you to compare different scenarios and make well-informed financial decisions.Remember, knowledge is power! Understanding how car finance is calculated enables you to navigate the car-buying process confidently, negotiate better terms, and find a deal that suits your budget and needs.

If you have any questions, feel free to contact us.

If you’re considering purchasing a new car, how much you can afford is often one of the key questions that arises. Below are a few tips to help

Assess Your Finances

The first step is to evaluate your current financial situation. Take a comprehensive look at your income, expenses, and any existing financial commitments. Understanding your monthly budget is crucial in determining the amount you can comfortably allocate towards car finance payments.

Deposit Considerations

A significant factor influencing the amount you can afford is the deposit you can make. A larger deposit reduces the loan amount, which in turn lowers your monthly repayment obligations. Saving up and setting aside a reasonable deposit can positively impact your affordability.

Debt-to-Income Ratio

Lenders often use the debt-to-income ratio (DTI) to assess your ability to repay the loan. DTI compares your total monthly debt payments (including potential car finance) to your monthly income. Typically, it’s advisable to keep your DTI below 40% to ensure manageable financial commitments.

Research Loan Options

Understanding the various car finance options available is essential. Explore loan terms, interest rates, and loan periods offered by different lenders. Comparing these options will help you determine the most suitable loan for your financial circumstances.

Affordability Calculators

Online affordability calculators can be invaluable tools in estimating the amount of car finance you can afford. By entering your income, expenses, and desired loan term, these calculators provide a reasonable estimate of your monthly payment range.

Future Financial Goals

It’s essential to consider your long-term financial goals before committing to a car finance agreement. If you have other significant financial aspirations, such as saving for a mortgage or starting a business, ensure your car finance payments align with these objectives.

Seek Professional Advice

If you find the process overwhelming or have specific concerns, don’t hesitate to seek professional advice. We can offer personalised guidance based on your unique circumstances, helping you make an informed decision.

Responsible Borrowing

Remember, borrowing responsibly is crucial to maintaining a healthy financial outlook. Avoid overextending yourself and carefully assess your ability to meet the repayment obligations before finalising any car finance agreement.

If you have any questions, feel free to contact us.

A situation may arise where you might contemplate having car finance in someone else’s name, below we outside some of the things to consider before making your application.

KEY CONSIDERATIONS 

Lender Approval

The first step is to consult with your car finance lender regarding the possibility of having the finance agreement in another person’s name. Different lenders may have specific policies or guidelines on this matter.

Credit Assessment

The lender will likely conduct a credit check on the individual assuming the car finance. This is to ensure that the new borrower possesses the financial capability to meet the loan obligations.

Responsibility and Liability

It is important to understand that when obtaining car finance, the new borrower will assume both the responsibility and liability for the loan. They will be legally bound to make timely payments and adhere to the terms and conditions of the finance agreement.

Existing Agreements

If the car finance is already underway, transferring it to someone else’s name may involve additional charges or fees. It is crucial to review your current agreement and consult with the lender to comprehend any potential implications.

Legal Formalities

To formalise the transfer, the lender may require specific legal documentation. This typically includes a transfer of ownership form and the creation of a new finance agreement between the lender and the new borrower. Open and transparent communication is vital throughout this process. Ensure that all parties involved are fully aware of their responsibilities and obligations to prevent any misunderstandings or complications. It’s important to note that car finance practices can vary among lenders, so it is advisable to consult with your specific provider and seek professional advice from a car finance broker, to gain a comprehensive understanding of the process and its implications.

If you have any questions, feel free to contact us.

In short, car finance cannot be transferred to another vehicle.The existing car finance must be paid off first. This is typically known as a “finance settlement” or “settling the finance” on the existing car and then obtaining new finance for the replacement vehicle.

HERE’S HOW IT GENERALLY WORKS

Settle the finance on the existing car

You will need to settle the outstanding finance on your current vehicle. This involves paying off the remaining balance on the existing car loan or lease agreement. You can do this by either paying the remaining balance in full or arranging for a new finance agreement to cover the outstanding amount, known as the ‘balloon payment’ depending on the type of finance.

Obtain finance for the new car

Once you have settled the finance on your existing car, you’ll need to arrange finance for the replacement vehicle. This can be done through various methods such as obtaining a new car loan, leasing a new vehicle, or entering into a hire purchase or contract plan agreement, depending on your preference and eligibility.

Equity or shortfall

If there is any equity (if the value of the existing car is higher than the remaining finance) or a shortfall (if the value is lower), it will be taken into account during the new finance process. If there is equity, it can be used as a deposit towards the new car finance. If there is a shortfall, you may need to make additional payments or explore options with your lender or finance provider to bridge the gap.

It’s important to contact your current finance provider, lender or finance broker and discuss your intentions. They will provide guidance on the process, any fees or charges involved, and the necessary steps you need to take.  Remember to carefully review and understand the terms and conditions of the the new finance agreement before proceeding.

If you have any questions, feel free to contact us.

A common concern that many individuals may be facing at the moment when it comes to car finance is what if they can no longer afford the repayments. If you find yourself in a situation where you can no longer afford your car finance payments, you’re not alone, and there are options available to help you.

Review Your Finances

Start by taking a deep dive into your current financial situation. Understand your income, expenses, and evaluate where you can make adjustments. Identifying areas where you can cut back on spending might free up some funds to help you meet your car finance obligations.

Contact Your Lender

If you foresee financial difficulties in meeting your car finance payments, it’s important to reach out to your lender as soon as possible. Communication is key! Explain your situation honestly and openly. They may offer you alternatives like a payment plan adjustment or temporary payment deferment.

Consider Refinancing

Depending on your circumstances, refinancing your car loan might be an option worth exploring. Contact other lenders and brokers to compare interest rates and terms. Refinancing could potentially lower your monthly payments or extend the loan period, making it more manageable for you in the long run.

Seek Financial Assistance

There are several organisations that can provide you with free advice and support. Reach out to Citizens Advice, StepChange, or the National Debtline for guidance on dealing with financial challenges. They can offer valuable insights and help you navigate the available options.

Voluntary Termination

If you’re unable to continue making payments and have already paid at least half of the total amount owed, you may be eligible for a voluntary termination. This allows you to return the car to the lender without any further financial obligations. However, it’s crucial to carefully consider the potential impact on your credit rating and future borrowing prospects.  Remember, each situation is unique, and it’s important to seek professional advice that suits your specific circumstances.  Financial challenges can be stressful, but there are solutions available to help you navigate these difficult times. You’re not alone, and there’s no shame in seeking support when needed.

If you have any questions, feel free to contact us.

Finding the right financing options when you’re new to a country can be quite challenging. Whether you’ve recently relocated to the UK or have just obtained residency, you’ll be pleased to know that it is indeed possible to obtain car finance as a new resident.  The key is to understand the requirements and take the necessary steps to improve your chances of getting approved.

HERE’S WHAT YOU NEED TO KNOW 

Establish credit history

Lenders often evaluate credit history to assess an applicant’s financial responsibility. As a new resident, you might not have a UK credit history. However, you can start building one by opening a UK bank account, obtaining a national insurance number, and ensuring timely bill payments.

Proof of income and residency

Lenders will require documentation to verify your income and residency status. This typically includes recent payslips, employment contracts, utility bills, and proof of your right to reside in the UK.

Consider a guarantor

If you have difficulty obtaining finance on your own, having a guarantor with a solid credit history can significantly improve your chances. A guarantor is someone who agrees to make the repayments if you’re unable to do so.

Research lenders and dealerships

Explore different lenders and car dealerships that specialise in assisting new residents or individuals with limited credit history. They may have specific programs designed to cater to your situation.

Save for a deposit

Saving for a deposit can demonstrate your commitment and increase your chances of getting approved. It also helps reduce the amount you need to finance, making it more manageable.

Seek professional advice

Consulting with a car finance specialist can provide valuable insights and guidance tailored to your specific circumstances. They can help you navigate the process and find suitable financing options.  Remember, each lender has its own criteria, so don’t be discouraged if you face initial rejections. Persistence and careful research are the keys to success. Keep exploring different options until you find a suitable lender who understands your situation.  Being a new UK resident shouldn’t hinder your dreams of owning a car. By understanding the requirements and taking the necessary steps, you’ll be cruising the roads in no time!  If you have any questions or need further guidance, feel free to contact us.

We are Independent Car Finance Brokers.

If you have any questions, feel free to contact us.

Are you a business owner or director looking to acquire a company car for your limited company?  Understanding how car finance works in this scenario can be vital for making informed decisions.  First, it’s important to note that limited companies are separate legal entities from their owners. This means that when it comes to acquiring a car, the company can be the registered owner rather than an individual. By doing so, you can take advantage of specific financing options designed for businesses.

TYPES OF CAR FINANCE

Hire Purchase (HP)

With HP, the limited company pays a deposit and then makes fixed monthly payments over an agreed-upon term. Once all payments are complete, the company gains full ownership of the vehicle. During the term, the company is the registered keeper, but the finance company holds ownership until the final payment.

Finance Lease

This option allows your limited company to use the vehicle for an agreed-upon period in exchange for fixed monthly payments. At the end of the lease, the finance company usually sells the car and shares the proceeds with your company. Alternatively, you may have the option to extend the lease or upgrade to a new vehicle.

Contract Hire

Contract Hire is a popular choice for many businesses. It involves making fixed monthly payments to lease a vehicle for an agreed-upon period. Unlike finance lease, you won’t have the option to purchase the car at the end of the contract. However, contract hire provides simplicity and flexibility as it often includes maintenance and servicing costs.

KEY CONSIDERATIONS 

Eligibility

As a limited company, you’ll need to demonstrate financial stability and provide the necessary documentation to secure car finance.

Credit Checks

Most finance providers will conduct credit checks on your company, so it’s crucial to maintain a good credit history.

VAT Considerations

Depending on your circumstances, your limited company may be able to claim back a portion of the VAT on car finance agreements.

Seeking Expert Advice

Navigating the world of car finance for limited companies can be complex, and it’s always advisable to consult with finance professionals who specialise in this area. They can provide tailored advice based on your company’s specific needs and ensure compliance with relevant regulations.

If you have any questions, feel free to contact us.

In the realm of car financing, there are many options available. Some include a final lump sum payment at the end of a fixed term, knows as a ‘balloon payment’. However, there are alternatives:

Personal Contract Purchase (PCP)

PCP is a widely adopted car finance option. It allows you to pay a deposit followed by affordable monthly payments over a fixed term. At the end of this term, you have three choices: return the vehicle, make a final payment to own it outright, or part-exchange it for a new car. With PCP, you can enjoy the freedom to adapt your decision based on your changing needs, ensuring a tailored ownership experience.

Personal Contract Hire (PCH)

PCH, also known as car leasing, has gained a lot of popularity over the years. It offers the opportunity to drive a brand-new vehicle without worrying about a final payment or outright ownership. Under a PCH agreement, you pay a fixed monthly rental fee for the duration of the contract, typically ranging from 2 to 4 years. At the end of the term, you can simply return the vehicle and explore a new lease, enjoying the benefits of driving the latest models without the commitment of ownership.

ADVANTAGES

Opting for car finance solutions without a final payment brings several advantages:

Enhanced Flexibility

By eliminating the burden of a final payment, these options offer greater financial flexibility, allowing you to adapt to changing circumstances or explore alternative choices.

Lower Monthly Payments

With no final payment to account for, the monthly payments on these car finance agreements can often be more affordable, easing the strain on your budget.

Peace of Mind

Say goodbye to unexpected financial surprises! Car finance without a final payment provides a transparent and predictable ownership journey, enabling you to plan your finances with confidence.

DISADVANTAGES

There are a number of disadvantages and you should be made aware of these before making a commitment:

• Potential wear and tear charges
• A low credit score may lead to a higher interest rate
• Charges for exceeding the mileage allowance
• Early cancellation can be expensive
• Limited choice of Makes and Models

If you have any questions, feel free to contact us.

Interest rates have shot up a number of times this year, so how does that impact your current car finance agreement or, perhaps, a car you have your sights set on?

Official base rate increase by the Bank of England

The Bank of England (BoE) has again increased the official base rate for UK borrowing. This will have a domino effect on interest rates for nearly all new finance agreements.  The base rate is currently 5.25%, which is an increase of a quarter of a percentage point – the 14th consecutive rate rise, and we believe more increases are on the way.  The rise in rates are in direct response to continually increasing inflation and have, in fact, been put in place to curb spending. So, what does this mean for car buyers?  Most car buyers are concerned, naturally, as the majority of vehicles, particularly prestige and luxury marques, can be heavily financed.

Here’s what you should know about the effect of this increase on your finance agreement under a variety of scenarios:

Existing car finance agreement

Nearly all car finance agreements across the UK have a fixed interest rate for the entire contract. Let’s say your annual percentage rate (APR) at the time of sign up was 5.9 %, then it stays the same throughout the agreement.
This also means that your monthly payments will remain the same, even if the Bank of England interest rates fluctuate.  Things change, however, when you enter a financing or re-financing agreement with a car finance lender. Since that’s considered a ‘new contract’, your current interest rate will not be applicable.

Contract signed but vehicle delivery not taken

After you sign a car finance agreement, the rate no longer changes. If you’ve signed off on your car finance contract and are waiting for delivery, then you will not be affected.

Currently shopping for a car

Check with the car finance provider whether the previous quote you were given is still valid. This is very important as lender quotes usually last no more than 30 days.

If you’re planning to buy in the coming weeks or months

No matter what kind of car you’re planning to buy, chances are it will be more expensive to finance in the coming weeks and months. Car finance lenders will almost immediately pass on the increased rates to you which means the monthly payments will now be higher than they were when you took out your previous car finance agreement.

Advice is only a phone call away – 0330 174 8540.   Liber Financial offers flexible car finance options on a variety of prestige and luxury cars, both new and used.

If you have any questions, feel free to contact us.

For those who have recently purchased a car or are considering financing options, understanding the timing of your first payment is essential for budgeting and planning.  Typically, your first car finance payment will depend on various factors, such as the terms of your loan agreement and the specific policies of the lending institution. However, here are a few common scenarios that can help guide you;

Some lenders may require your first payment immediately upon signing the financing agreement. In this case, it’s important to have the necessary funds available in your bank account when finalising the paperwork. Other lenders might offer a grace period before your first payment is due. This grace period can range from a few days to a couple of weeks, giving you some time to adjust to owning the vehicle before making your initial payment.  Occasionally, you might have the option to customise your payment schedule. This could include choosing the day of the month for your payments to be deducted from your account or even selecting a bi-weekly or monthly payment frequency that aligns with your financial preferences.  To avoid any confusion or surprises, it’s crucial to carefully review your finance agreement and communicate with your lender to understand the exact terms of your car finance arrangement.  Additionally, it’s always a good idea to set up reminders in your personal calendar or banking app to stay on top of upcoming payment dates.  Remember, maintaining a good payment history is not only important for your credit score but also helps you build a positive relationship with your lender. It’s in your best interest to make timely payments and keep track of your car finance obligations.

Further advice is only a phone call away – 0330 174 8540.  Liber Financial offers flexible car finance options on a variety of prestige and luxury cars.

If you have any questions, feel free to contact us.

Eco-friendly or green car finance refers to a car financing option for those who want to buy a low-emission or zero-emission car. So, if you’re planning to buy a hybrid or purely electric vehicle (EV), then a green car loan may be the best option as it will usually offer better interest rates and other perks as well.  By 2030, the UK government will put an end to the sale of all new petrol and diesel vehicles bought either for personal or commercial use. And, by 2035, all new vehicles must be zero emission.

This has made the prospect of buying an electric or hybrid car a very exciting one.  In fact, in 2022, over 365,000 plug-in hybrid and battery-powered electric cars were registered, indicating a growing trend which was up by 20% from 2021. Towards the end of June 2023, over 1,325,000 plug-in hybrids and more than 810,000 battery-powered vehicles or EVs were registered.  This marks a very favourable trend towards more and more people choosing a hybrid or electric vehicle over a traditional petrol or diesel one, which means that it pays to understand some of the benefits of owning a non-petrol/diesel car and how green car finance schemes can help.

So does it make sense to get eco-friendly car finance for hybrids & EVs?  In reality EVs aren’t exactly ‘cheap’ compared to their petrol or diesel counterparts. However, that shouldn’t discourage anyone from going green because in the long run, it’s a much more cost-effective investment than outright buying a petrol car.  For instance there are tax exemptions, along with government incentives to help more people easily make the switch to hybrid and electric.  Generous tax incentives also remain in place, including some very enticing company vehicle tax rates where drivers can potentially save more than £2,000 year.  If you’re planning to buy an electric or hybrid through a car loan or finance scheme, the purchase can be a good move for your bank account too, because you will likely not have to put nearly all or most of your savings into a single purchase.  No matter what you choose – a personal contract purchase agreement or hire purchase deal – you will certainly find something that fits your unique financial situation.

Buying an electric or hybrid car today has become easier than ever, with so many different car finance options available and the government offering grants on EVs and hybrids.  Electrics/hybrids are also a lot cheaper to maintain and together with a green finance agreement, your dream of owning an EV or hybrid can be realised sooner than you think.Thinking of buying a car in the near future?

If you have any questions, feel free to contact us.