Pay as you go car finance
Looking for an alternative to traditional car finance? If your credit score needs some work or you can’t commit to monthly payments, pay as you go car finance could be a more flexible alternative for you.
Instead of monthly payments, you could make smaller weekly payments that may suit your budget and your lifestyle better.
At Car Finance 247, we don’t offer pay as you go car finance, but we can try and help you understand exactly what it is and whether it could be the right choice for you. Here’s everything you might need to know.
What is Pay As You Go Car Finance?
Pay as you go car finance – also called pay weekly car finance, or pay as you drive car finance – is a type of car finance agreement where you make repayments weekly instead of monthly. This could make it easier to manage the payment in smaller chunks, especially if you’re paid weekly.
Often, lenders install a pay as you go car finance black box in the car, which tracks payments and usage. If a payment is missed, the lender may send reminders or, in some cases, remotely disable the car until the payment is made.
Because this reduces the risk to the lender, it could make it easier for people with bad credit or no credit history to get approved, subject to status.
Who is Pay As You Go Car Finance Best Suited For?
Pay as you go car finance could be ideal for people who find traditional finance difficult to access. This may include:
People with bad credit – Pay as you go finance with bad credit isn’t necessarily out of the question. If your credit score has been affected by missed payments, defaults, or County Court Judgments (CCJs), you may be more likely to be accepted with this type of finance because lenders sometimes see it as less risky, subject to status.
Benefits claimants – Pay as you go car finance on benefits may also be a possibility. Some lenders may consider applications from people without a traditional income stream. But, you’ll still need to show you can afford the repayments and meet the lender’s criteria.
People with low or variable income – If monthly payments don’t suit your pay schedule, weekly payments could be easier to manage, especially if your earnings change from week to week.
Applicants previously refused credit – Because of the extra security the black box provides, some lenders may be more willing to approve applications, even if you’ve been refused car finance before, subject to status.
How Does Pay As You Go Car Finance Work?
Here’s the typical process of how pay as you go car finance works:
Get matched with lenders offering weekly or pay as you drive car finance options.
Choose a car and confirm the terms of your agreement.
Make regular payments via direct debit or black box-based system.
If you opt for pay as you go car finance with a black box, a box will be fitted in the car, usually in the glovebox or under the dashboard. The black box will send you reminders to pay. Only when you’ve made all your payments will the black box be removed.
What are the Pros and Cons of Pay As You Go Finance?
Is pay as you go car finance right for you? To help you make an informed decision, here are some pros and cons to weigh up.
Pros:
Accessible to people with bad credit – Pay as you go car finance might be a suitable choice for people with lower credit scores who may have been refused traditional car finance before, subject to status.
Sometimes easier to place weekly payments over monthly payments – For some people, paying a smaller sum weekly may be more manageable than a larger monthly lump sum, depending on when they’re paid.
Could help rebuild credit – Getting pay as you go car finance with bad credit could help you improve your score over time if you pay on time. But, missing payments could have the opposite effect and harm your credit rating.
Cons:
May involve black box installation – Some people might be put off by installing a black box that tracks your payments and sometimes your mileage.
Could be more expensive over time – Weekly repayment plans may work out more expensive overall than monthly ones. And, as lenders sometimes see pay as you go finance as higher risk, they may charge higher interest.
Not always available from all lenders – Not every lender offers pay as you go car finance agreements, so your options may be more limited.
Risk of immobilisation – If you don't pay your pay as you go car finance on time, your car could be immobilised and you won’t be able to drive it until you pay.
Remember, you should only take out car finance if you’re sure you can keep up with the repayments. Missing payments could lead to additional charges and as a result may affect your credit rating.
Pay As You Go Car Finance Alternatives For Bad Credit
A poor credit score doesn’t necessarily mean the end of the road. You may still be able to get car finance with bad credit. Although we don’t offer pay as you go car finance at Car Finance 247, we could offer HP car finance and work with lenders who specialise in bad credit. They look at more than just a credit score and take your job and income streams into consideration too.
Just remember that the interest rate may be higher and you may be offered less favourable loan terms than those with higher credit scores.
The takeaway
Pay as you go car finance could be a flexible way to get a car if traditional finance isn’t an option for you. It might also be a good alternative if you’ve got bad credit, are on benefits, or you just want smaller weekly payments to keep up with instead of a monthly sum. Credit is subject to status.
Considering traditional car finance? Get your quote today to start your journey.
Disclaimer: Car Finance 247 Limited is a credit broker, not a lender. Finance is subject to status and affordability checks. We do not provide financial advice. Your application and the rate you are offered will depend on your individual circumstances. Terms and conditions apply.