6 Things to Check Before Signing a Car Finance Agreement

However, despite their benefits, it’s important to remain vigilant when signing an agreement. This will ensure you understand exactly how your car finance deal will work. To avoid unnecessary charges and stress, read the contract thoroughly and watch out for the following stipulations.

1. Mileage limit

From the get-go, the contract will outline a mileage limit, meaning you may have to restrict the amount you travel each year. If you exceed this, expect charges anywhere between 3p to 70p per mile.

Before committing to a cap, work out what a realistic mileage looks like for you and anticipate how it could change over time. Ask yourself how much you travel each year on average, how often you commute to work via car and whether you’re planning to switch jobs or move house.

Ideally, allow for all possibilities by choosing a contract that provides more mileage than you’re expecting to do, even if this means paying a small additional fee upfront.

2. Service requirements

Some car finance agreements ask you to service the car on set dates at specific dealerships alongside general car maintenance. If the contract is unclear, ask your lender exactly what they expect from you and put any dates in your diary as soon as possible.

3. Damage charges

Most lenders allow for reasonable wear and tear, but the definition of “reasonable” varies. For peace of mind, make sure you’re on the same page when it comes to damage – what’s passable, what’s chargeable and how much will those charges be?

4. Payment schedule

Prepare to meet monthly repayments by double-checking the payment plan and, if possible, negotiating an arrangement that suits your income stream. Can you arrange a fixed repayment rate with your lender? If necessary, could you adjust your payment dates further down the line?

Try to get these details settled before signing the contract. It’s much harder to do so once the agreement is active.

5. Late payment policy

While lenders are sympathetic towards a change in circumstance, there are still penalties for missing repayments. It’s best to find out what these are so you can factor them into your final decision.

6. Insurance policies

Some agreements sound too good to be true, offering insurance policies that appear to be free. If you come across this, scrutinise the terms and conditions as it’s more likely you’ll be asked to cover the insurance as part of your monthly repayments.

Do you need help finding a fair car finance agreement?

That’s where My Car Credit comes in. We’re experts in securing the most preferable market rates for car financing through our panel of lenders – the largest panel out of any UK broker.

To learn more, call us on 01246 458 810 or drop us an email at enquiries@mycarcredit.co.uk – one of our specialists will get back to you as soon as possible.