Black box car finance
Black box car finance
Black box car finance is a type of finance agreement that helps lenders ensure payments are made on time. It could be offered to people who may struggle to get approved for standard car finance, such as those with bad credit or a limited credit history. The black box helps give lenders extra security, which could make them more willing to approve finance applications.
Thinking about getting black box finance but want to know a bit more about it first? Whilst we don’t currently work with lenders who can offer black box finance, we’re here to help you understand what it is. In this guide, we’ll explain how black box finance works, its pros and cons, and answer common questions to help you make an informed decision.
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 from your insurance company tracks your driving habits. In contrast, a device from your finance provider is only for monitoring 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 Car Finance 247, we’re not currently able to offer black box car finance.
How does black box car finance work?
So, how does black box finance work from start to finish? Here’s what you can expect:
Installation – A black box device is fitted to the car before you can drive it.
Payment reminders – Before each payment is due, you’ll receive a monthly reminder via text or from the box itself emitting a flashing red light.
Make your payments – Regular monthly payments must be made as per the agreement. Once you’ve paid, the black box will either reset itself automatically, or you may have to enter an activation code to unlock the car.
Missed payments – If a payment is late, the black box may prevent the car from starting until the overdue amount is paid.
End of the agreement – When your loan term ends, the black box will be removed.
Hire Purchase black box finance
It’s worth noting that 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 more manageable monthly repayments.
You might need to put down an initial deposit (although no deposit car finance options are available) and then make fixed monthly payments including interest for between one and six years, depending on your term.
When you have finished making all the payments and reach the end of your loan term, you may 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. But, 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 black box 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; some lenders may 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 easier knowing you’ll be reminded when your payment is due, but it helps to reassure the lender.
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 choice for you.
Black box car finance with bad credit
If you’ve missed payments in the past and ended up needing a bad credit car finance deal, black box car finance could help you find an approval. A black box finance agreement may offer certain assurances to lenders, because it shows you’re committed to making payments on time.
If you stay on top of your repayments with the black box reminders, the loan can help show you’re a responsible borrower. This, in turn, could help improve your credit score over time. Credit is subject to status.
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.
In some cases, two credit checks will take place: a soft credit check to assess your loan eligibility. If you are approved in principle and choose to proceed, a hard credit check will be conducted which may affect your credit score. Soft checks won’t show up to lenders on your file or impact your credit rating. But, hard credit checks are visible on your credit report for up to a year and are visible to other lenders.
These checks help lenders understand your borrowing history. They also show if you can 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.
The pros and cons of car finance with a black box
Black box car finance has its benefits, but there are also some downsides to consider. Here are some pros and cons to help you weigh up whether it’s right for you.
Pros of black box car finance
Helps with budgeting – The black box provides payment reminders, helping reduce the risk of missing payments.
Chance to rebuild credit – Making regular payments on time may improve your credit score over time.
Gives lenders confidence – Since the black box helps ensure payments are made, lenders may be more willing to consider an application than they would otherwise.
Cons of black box car finance
Car may be disabled for missed payments – If you don’t make a payment on time, the black box may stop the car from starting.
Privacy concerns – Some people may not feel comfortable having a device in their car linked to their repayments.
Potential extra costs – If you struggle to keep up with payments, you may face late fees or extra charges.
Got any questions about car finance? Give us a call.