Cash News
Martin Lewis’ Money Saving Expert site has urged road users hoping to secure a new or second-hand car should buy the vehicle with a credit card instead of taking out finance deals to secure “greater protection”.
Processing even part of the payment towards a car using a credit card can be extremely advantageous with buyers set to be better guarded.
According to MSE, purchasing a small amount through a credit card opens up the Section 75 protection which means card providers are liable should something go wrong.
It means owners will have double protection in a crisis with the dealership and lenders having to help.
The experts handed out the tip as they warned road users to look at alternatives to securing car finance agreements this summer.
MSE explained: ‘If the seller accepts credit card, pay even a penny towards the car on it and you’ll get powerful Section 75 protection (provided the car costs between £100 and £30,000).
“The credit card provider is then jointly liable with the car dealer should anything go wrong, so means it should be a lot easier to sort out any issues with the car further down the line.”
“Once you’ve made all the repayments, that’s it. The lender marks the loan as settled on your credit file, and you have nothing left to pay.”
MSE also stressed that paying for a car using a credit card will also mean the vehicle is still legally owned by the driver.
There are also no mileage restrictions in place as the vehicle is legally yours even if you’re paying the money back.
This differs from many car finance schemes which have strict rules in place which motorists are likely to fall foul of.
In a Personal Contract Purchase (PCP) deal, the finance company will own the vehicle unless a final payment is made to take on the model.
Motorists will also not own the model if they decide to lease a vehicle or take out a Personal Contract Hire (PCH) agreement.
Mileage limits will also be in place with drivers told they cannot cross certain thresholds while behind the wheel.
Car finance deals also stick drivers on restrictive payment plans which usually last anywhere from one year to five years.
However, monthly charges are likely to be lower than if motorists were to secure the car themselves using a personal loan or credit card.
MSE added: “These generally involve lower monthly payments than personal car loans, as well as a smaller down payment.
“Because of this, you may be able to afford a swankier car than you would if you bought one outright.”