Pay as you go car finance

What is pay as you go car finance?

Pay as you go car finance (also known as black box car finance) is a type of car financing which allows you to pay for your car as you use it. It is based on a HP (Hire Purchase) agreement which requires an initial payment followed by scheduled monthly repayments. However, a pay as you go loan is a different kind of credit agreement, which involves receiving a 'black box' that will disable the vehicle if payments are missed.

How does PAYG car finance work?

The way pay-as-you-go car finance works is relatively simple. Autozone (Car Credit Now) will be able to connect you with a suitable pay-as-you-go car finance provider and you will just need to provide them with some basic information about yourself. After you've provided this information, the provider will install a telematics device in your car. This is why you may have heard it referred to as 'black box car finance'.

The black box is there to keep track of your payments and it will be connected to the system managed by your lender. Typically, the box will have a green light which will turn red and start flashing a few days before a monthly payment is due to remind you. Depending on your finance provider, you may also get sent a reminder via text. After making the payment, your box will either reset automatically or you may need to enter a code provided by your lender. Typically, lenders provide a grace period of 30 days for you to arrange funds for your payment. However, if you fail to make the payment after this period, the black box will disable your car, rendering it undrivable.

Why choose PAYG car finance?

The main advantage of pay as you go car finance is that it provides lenders with insurance, which means that they will be more likely to accept applications that are considered to be a higher risk. For this reason, car finance with black box can be a great option if you have a low credit score. Traditional car loans often require a high credit score, but pay as you go car finance providers are more lenient in this regard, so you will have a better chance of getting a car even if you have a poor credit history.