Right. You need a car loan, pronto! But you’ve got poor credit, or you have CCJs on the register, there’s a couple of missed payments on your credit card record, or you’ve defaulted on some other kind of loan in the past, meaning that your credit score is pretty low right now. Don’t fret.
Securing car finance is still entirely possible. And if you need to pay a sum in advance but finding the cash simply isn’t doable you may even be able to use your old car as a deposit and part-exchange.
Preparing for your application
Essential to speeding up an application is being thoroughly prepared with the information that’s needed – and when you’re actually filling in the form, make sure it’s correct, no typos, no anomalies. “I couldn’t understand why I was turned down” Tara in Watford says, “I knew my credit history was patchy so I thought that might be it. But turned out, while I’d filled in the form as carefully as I could, I made a typo on the amount I earned.“
But even before you get to the form, there are some really simple but useful things you can do before making your car finance application that will make all the difference – and take a lot of stress out of the process. In our experience, if you have the answer to the following four questions you’re a well prepared applicant:
1: What can you realistically afford in monthly repayments?
Having a clear budget already worked out is important before you even contemplate picking up the phone to talk to a car finance specialist. Work out how much you can afford to set aside from your usual monthly spending, being sure to assess if you can maintain those repayment sums for a 36-month period (opting for a 3-year deal is usually best). And don’t forget to factor in the interest payments you’ll need to fork out for, on top of the actual loan repayments. APR rates can become worrying as a long-term loan deal drags on and on. Keep it to three years to avoid all that unnecessary stress.
2: Do you even know how your credit rating is looking?
You may have good credit, bad credit or no credit history at all. Best to find out exactly where you stand with it all though, before seeking car finance. But don’t be concerned that having poor credit will scupper your chances of getting a loan. You might still be in luck and find yourself driving away a nice new car from a car finance dealership sometime soon. Remember, amongst all of the usual run-of-the-mill vehicle financing companies there are others with access to specialist lenders who are prepared to work with people who have poor or bad credit background. Also, check your credit file for any errors whether large or small, and get them corrected.
Talking of that…
3: What type of car would suit you best?
As tempting as it can be to drive way from a dealership forecourt a flashy car with all the bells and whistles, is it really going to be the right vehicle for you and your family in the week-in-week-out? Try to resist going for something amazing-looking but rather impractical (or WHOLLY unsuitable!). Have a good think about where you’ll be driving, how many passengers you’ll usually be transporting, and if you can park easily near your home… Don’t opt for a BIG vehicle only to find you end up having to park it half-a-mile from your front door every time you come home from work or Tesco Express!
Having a fair idea of what would be the most suitable car for you could save you time, money and a whole load of hassle once your application for car finance has been approved.
4: Do you know what your other car-related costs will be?
It’s not the most riveting subject is it, Road Tax?! Even so, it has to be considered as a related expense when thinking of signing up to a car finance agreement. And then there’s car insurance to think about, breakdown recovery cover, your petrol or diesel outlay each month… When you do your sums be sure to add these costs to the list. It’s about getting a clear picture of the total costs involved in keeping a car on the road for the next three years.