You’ve decided you want to purchase a new or used car, that’s great. You’ve identified the type of vehicle you want and now you need to decide on whether you have the cash already to fund the purchase or if you’ll need some form of car finance to pay for it. Whilst the vast majority of us would love to make a cash purchase without having to rely on any borrowing, the reality is buying a car is one of the most expensive items you’re likely to purchase, besides a property. For this reason, turning to car finance is the perfect way to make this as easy as possible and spread the costs.
Before you do so, there are a few things all car buyers should consider before applying for car finance to be more likely to be approved for the amount you need. Here are some top tips to help you:
Check Your Credit Score & Choose a Lender Wisely
It’s always a good idea to know what status your credit score currently is, especially if you have no idea and have never done so. You can check this by using one of the credit reference agencies (CRAs) such as Experian or Equifax, and for free you’ll be able to see your current score. The reason this is worth doing before applying for car finance is to give you an idea of how likely some lenders will be to help. If you find your score is currently highlighted as poor or bad, this will rule you out for some lenders as they will not want to take the risk. The good news is many lenders are willing to help you with poor or very bad credit car finance.
If you can prove you can afford to pay for car finance, despite having a poor or bad credit history, these specialist lenders will be able to consider your affordability over your current credit score, meaning a higher chance of success.
Review Your Finances
It goes without saying that you need to be sure you can afford car finance before taking it out, so spend some time reviewing your finances. The best way to do so is to look at your full income each month and primary expenditure such as bills, working out the amount of disposable income. If you find this is low, take a look at any regular purchases or payments that you make in a month and look for opportunities to cut back. If a lender requests to see supporting documents for your car finance application, such as your bank statements, you’ll need to be able to show that you can maintain the repayments they are offering. This can be time-consuming going through it, but it is well worth doing so to ensure you won’t be overextended to make repayments.
Shop Around to Find the Best Deals
You’ll want to choose car finance that not only provides a higher chance of approval but provides you with the terms you’re looking for. Whether you want a loan term for 48 months for example, or over a longer or even shorter timeframe, you’ll want to find the lenders able to match this. Also, if you can, look out for a lender providing the car finance and the vehicle itself, this can mean you can ensure the value of the vehicle matches with the terms being offered. After all, you don’t want to be overpaying for an older model that doesn’t meet your needs, so take the time to check the vehicle you want to purchase meets all your requirements from fuel efficiency to comfort features.
Above all, take your time when looking for car finance and the vehicle you want, that way you’ll always find the right terms for you and spend less time frustrated with having your application declined.