A quick guide to black box car finance

What is black box car finance?

Black box car finance is aimed at drivers who might forget to make their debt repayments. It’s designed to keep borrowers on track by sending a reminder ahead of each monthly payment due date.

Don’t get black box car finance confused with black box insurance. A black box installed by your insurance company is used to monitor your driving habits, but a device issued by your finance provider isn’t interested in how hard you brake or the time of day that you hit the road. Instead, it’s solely focused on tracking your car finance payments.

Depending on the black box you’re issued, it’ll usually be fitted to the inside of your car and connected to its internal computer so that it can communicate directly with your lender through GPS.

As it can reassure lenders that payments will be made on time, black box car finance can be a good option for people with poor credit ratings or fluctuating incomes.

Here at CarFinance 247, we’re not currently able to offer black box car finance.

How does black box car finance work?  

If you have a black box car finance deal, you’ll receive a reminder every time your monthly payment is due. You’ll usually get a few days’ notice either via text or from the box itself, which will emit a red flashing light.

Once your payment has been made and received, the box will either reset itself or ask you to enter an activation code. When your loan term ends, the black box will be removed.

Black box car finance is usually only available with hire purchase loans.

Hire purchase – or HP – is a type of car finance that lets you spread the cost of a car into manageable monthly repayments. You might need to put down an initial deposit (although no deposit options are available) and then make fixed monthly payments including interest for between one and six years. When you have finished making all the payments and reach the end of your loan term, you might have to pay a small ‘Option to Purchase’ fee, but then you’ll be the car’s official owner.

Terms and conditions do apply. During your HP loan term, you won’t be the car’s legal owner. This means that, while you’re responsible for its maintenance, road tax, servicing, and MOT, you won’t be allowed to sell or modify the car. However, once you reach the end of the agreement, the car will be all yours and you can do what you like with it!

What happens if I miss a repayment?

Despite receiving a reminder, you might still forget to pay or not have the funds available to meet your car finance due date. Don’t panic; lenders often offer a grace period of up to 30 days to cover these unexpected eventualities. Even so, if you don’t make the payment before this grace period ends, the GPRS system connected to the black box can remotely deactivate your vehicle.

There are precautions in place so that this won’t cause an accident. Your car will only be deactivated while it’s left idle. Once this has happened, you won’t be able to drive, and your car might be repossessed.

Is black box car finance right for me?

Black box car finance might be right for you if you’ve found it difficult to keep up with debt repayments in the past. Not only can you rest easy knowing you’ll be reminded when your payment is due, but the lender will feel reassured too.

However, not all lenders can offer black box car finance, which might limit your options and the APR offered. It’s also worth keeping in mind that this type of loan is usually only available with HP car finance, so if you’re looking for the option to return your car at the end of your term or the lower monthly repayments of a PCP deal, it might not be the right the choice for you.

Can I get black box car finance with bad credit?  

If you’ve missed payments in the past and ended up with a bad credit score, black box car finance might help you find an approval. Not only does this loan type offer certain assurances to lenders, but your willingness to have black box car finance shows that you’re serious about making payments on time. If you do keep up with your repayments thanks to the black box reminders, the loan could also help you demonstrate that you can be a responsible borrower and help improve your credit score over time.

Can I get black box car finance with no credit check?

It’s not possible to get black box car finance with no credit check. In fact, a credit check is an important part of the car finance process to ensure you get a deal that’s right for you and your circumstances. Typically, two credit checks will take place: a soft credit check to assess your loan eligibility, followed by a hard credit check. Hard credit checks are visible on your credit report for up to a year.

These checks can help lenders understand how you’ve acted as a borrower in the past and whether you can comfortably afford your monthly repayments. No type of car finance is guaranteed, and all lenders will carry out an eligibility check – based on their own criteria – to make sure you’ll be able to successfully manage your loan.