Negative Equity Car Finance​

Depreciation is a fancy way of saying that a car has decreased in worth over time. This is inevitable for the majority of vehicles, however, the rate and extent of depreciation will vary based on several factors:

• Age and mileage: The older a car is, the more miles it will have driven. This will inevitably lead to more signs of wear and tear, such as fading paint and the odd scratch mark, making it less desirable and lowering its value. 
• Brand reputation: Drivers have more confidence in brands with a reputation for producing high-quality and reliable cars. They therefore tend to be in higher demand, helping to lessen the impact of depreciation. 
• Features: Let’s face it, a car with an impressive array of features is going to be more attractive than one with a limited selection, enhancing the level of comfort and making for a more enjoyable driving experience. This can help the car to better hold its value over time. 
• Condition: A car that has been well looked after is likely to be in good condition and will therefore have a long lifespan, contributing to a slower depreciation rate. On the other hand, a car that has been neglected may experience a few more mechanical issues and will need to be replaced much sooner. 
• Market demand: In simple terms, a popular car will lose its value at a much slower rate than one that’s sitting at the back of the dealership. Certain trends can also influence this, such as the increased demand for hybrid and electric vehicles. 

Generally speaking, newer cars tend to depreciate quicker than older cars. Once a car is purchased, it experiences something called an ‘initial depreciation’. It doesn’t matter if the car has just left the dealership or has been driven for a few miles, there will be an immediate drop in value (usually a large percentage of its original purchase price). This is something to bare in mind as it will likely affect the car’s resale value if you decide to sell it in the future.

Although depreciation isn’t always a major issue when considering a finance deal, it is something to consider. If you are particularly concerned about depreciation, or you’re looking for something on the cheaper side, you may want to opt for a used car finance deal.

The good news is that there’s a whole host of cars available on the used market. Whether you have a specific model in mind, are struggling with a limited credit history, or don’t quite have the budget to buy brand new, there’s something to suit every driving need.

Haven’t found the car of your dreams? No problem! At We Finance Any Car, we have hundreds of thousands of pre-loved vehicles to explore. Simply pop on over to our car search portal and we will help you with the rest. 

Although being in negative equity on a car loan won’t directly affect your score, it may lead to financial difficulties. If you are unable to pay the monthly fees on time, or you consistently miss loan payments altogether, it can have a negative impact on your credit rating. This can remain on your report for several years and may act as a barrier to securing another finance agreement. 

If you are being held back by your credit score, we offer a flexible bad credit car finance service. We work with a panel of specialist lenders to try and bag you the best deal on the market, regardless of your financial circumstances.

We want you to enjoy a smooth loan term and would always recommend reviewing your budget before you sign any finance deal. Using our free car finance calculator, you can get a rough view of what your monthly payments will look like and determine whether the loan is affordable.

If you are unsure where to begin, our friendly team are always on hand to answer any questions or queries you may have. Get in touch now.