Does guaranteed car finance really mean guaranteed?

If you’re contemplating purchasing a new car on finance, beware of companies claiming to offer a service where loan approval is “guaranteed”. That rarely happens. Why? Because it’s not something that a broker can actually promise. The final decision on finance rests with the lender.

A broker or dealer offering a guarantee that you’ll definitely receive approval is usually someone to be wary of, not to rush towards. In other words, a bit of healthy scepticism is a good thing. And a bit of knowledge also goes a long way. Let’s look at some of the facts.

A kid looks at you with scepticism

It’s true. Beware of guarantee scammers!

Car finance companies offering “Guaranteed Approval” on all loan applications should beware. In the industry such an offer is becoming increasingly perceived as a scam. Damage to a loan company’s business reputation can be hard to recover from, particularly as, year on year, the car loans market is becoming more and more crowded, meaning that competition for customers is often stiff. If around a loan company there’s even a whiff of a ‘scam scandal’ anywhere online or in the printed media, eager car buyers will take their custom elsewhere.

It’s all about getting the lender’s approval

Industry regulators are also cracking down those who promise “Guaranteed Loan Approval”, failing to understand how any supposedly legitimate broker in the country can say such a thing, when car financing agreements invariably require a lender’s approval first.

Usually, offering a guarantee on a loan, is, of course, purely a baiting tactic. Once interested borrowers are hooked in (and have probably fallen in love with a particular car at a financing dealership forecourt), the dealer gets to work on selling a car finance package, explaining that “Actually, no one’s application for finance can be guaranteed by default”. Aargh!

Getting a decision on finance

How it works:

  1. A potential borrower makes an application;
  2. The dealer or broker sends the application off to a finance company for approval;
  3. The lender carries out a credit rating check and possibly other checks, to assess whether the person seeking a loan can make the monthly repayments;
  4. A decision is then made by the lender; and finally,
  5. The broker informs the applicant of the decision.

So, while some car leasing companies can genuinely offer a “Guaranteed Approval” (these are few and far between, and are usually finance brokers with a lending facility ‘built in’), the vast majority could never say for sure whether a loan application will be approved. They actually have your best interests at heart by not leading you up the ‘guarantee garden path’, so to speak!

For most people with good credit, or indeed bad credit, seeking to secure a car loan, dealing with an honest and straightforward broker who makes no promises usually always works out for the best in the end. A good credit provider will do their utmost for you when it comes to submitting your application for approval to a panel of lenders. And if approval isn’t forthcoming, at least you won’t be tied into a scary car finance agreement with monthly repayments that, in truth, you’re never going to afford, and which will could see you getting deeper and deeper into debt overall.

What we can guarantee

Albion Car Finance can’t guarantee you a loan, but from us you’ll certainly get a swift decision once your financing application is made. One thing we can guarantee is the high quality of the vehicle you’ll excitedly drive away from our dealership, if your application is approved. With finance in place, you can look forward to getting a super (HPI checked and cleared) car that’s fully valeted and ready to go!