Buying A Car On Benefits – What Are Your Options?

If you are living on benefits, money will likely be extremely tight, so buying and running a car can be difficult. But, with the right approach, a significant percentage of benefit claimants can own a car. Below we look at how you can access car finance on benefits.

Take Advantage Of Benefits Car Financing

The fact that you are on benefits does not automatically mean that you cannot access a car loan. Finance companies do not care where your income comes from, they just want to know that it is enough to cover your monthly repayments. However, it is sensible to focus on applying to those firms that advertise the fact that they offer benefits car financing. Because they are actively seeking out that type of client, they will be more likely to say yes.

Improve Your Credit Rating

If you do decide to buy a car using financing, you will want to keep the cost as low as possible. Improving your credit rating is the best way to do this by far. You need to:

•       Find out what your current credit rating is
•       Get any errors that are pulling your score down corrected
•       Pay all of your bills on time
•       Never pay less than the minimum monthly amount
•       Don´t max out or exceed the credit you already have; lenders want to lend to people who are borrowing quite a long way below their credit limit
•       Don´t make lots of applications for credit cards or loans, if you do want a new credit card or are applying for car finance use soft search methods like car finance calculators
•       Never borrow more than you can afford, if you end up with an IVA or Debt Relief Order this will negatively impact your credit report for 6 years

Consider Fractional Or Shared Ownership

Pooling resources and buying a car to share with friends, neighbours, and family members can work well. The key is that everyone is clear from the start about how the sharing process will work, usage limits and how repairs, fuel and maintenance will be dealt with.

Knowing the people that you will be sharing with well makes it more likely that shared ownership will work for everyone involved. Should you wish to formalise the arrangement, a solicitor can quickly draw up a joint ownership agreement.

See If You Qualify For Any Grants Or Other Types Of Help

Because car ownership has been shown to help people get back into the world of work and recover from illness, some organisations offer help with buying a car. An example is Family Fund which helps people with a disabled child to get on the road again. If you qualify, the Motability scheme may be an option.

Maximise The Amount You Get For Your Current Vehicle

If you already have a car that desperately needs replacing, maximise the amount you get paid for it. There are several ways to do this:

•       Take advantage of scrappage schemes –now and again the government and other official organisations offer people extra money to scrap older vehicles. The ULEZ scrappage scheme is an example of this.
•       Try selling your car for parts – if your car needs an expensive repair to get back on the road, consider selling it for parts rather than accepting what the local scrapyard will pay. It is surprising how easily certain makes and models sell, but if you do this you will need to make it clear the buyer is responsible for picking up the car.
•       Break your old vehicle down into spares – people are increasingly breaking their old vehicles down into spares. This option is not for the faint-hearted. Breaking the car apart is a skilled and time-consuming job. You will also need somewhere to store the parts and it can take many months to sell everything. Plus, of course, there is a chance you won´t be able to sell enough bits to make money. But if you go online and see that parts for your make and model are in high demand it might be worth trying.

Be Patient

When you are shopping for a car with an extremely limited budget you need to be patient. Often, you will have to shop around a lot to be able to find something good that you can also afford to buy.