Don’t fret. Affordable car loans CAN be secured, even if you’ve got poor credit and don’t feel you stand a chance of your finance application being successful.
The Internet is awash with information all about bad credit car loans, how they work, documents you’ll need to have at the ready when you pick up the phone to discuss your situation with a broker, and all sorts of other bits of advice and guidance.
But let’s talk this time, not about what to do to get your loan application approved by a lender, but what to avoid if you have poor credit.
Application fees, vanishing acts…
Car finance, like all other businesses has some super smart lenders who care about their clients and have earned a great reputation and others who are a little shady.
“I had a bad experience last year when seeking to buy a car on finance,‘ explains Jane in Watford. ‘The dealer I spoke to on the phone made it all sound so easy – too easy, as it turned out. He wasted a lot of my time, asked questions about my finances and my life that he had no right to. After guaranteeing me a car on finance, he also took a considerable amount of money from me as an “application fee”, only for my application to be turned down the next day!‘
In fairness to car finance professionals, they have their problems with dishonest people, too. In March 2012, a criminal gang in the Midlands used fake passports, driving licences, utility bills and wage slips to secure finance for a fleet of vehicles, with the intention of selling them for a small fortune before fleeing abroad with their ill-gotten gains. Only the sterling work of Staffordshire Police’s Economic Crime Unit saw the plot foiled and the gang members imprisoned.
What will you be doing in seven years’ time? Where will you be working? Where will you live? Will you be in good health? What will your income be?
Impossible to say, really, isn’t it? That’s why signing up to long-term a car finance agreement isn’t wise. Best to look about three years ahead, maximum, and to work out what you can realistically afford to pay on finance over 36 months.
Talking of looking ahead…
Which car is really best?
Just as avoiding a long-term payment plan is prudent, choosing the right vehicle to see you nicely through the next few years is also important. OK, you may fall in love with a three-door sporty car in candy apple red this week, and feel that you’ve simply GOTTA HAVE IT. But what about those plans you made to start a family next Spring? And as you’re moving to a new house closer to your favourite golf course in the New Year, is a sports car really going to be big enough to get your golf clubs etc. in twice a week? You might be able to get plenty of drivers, irons, putters, wedges and woods in that lovely leather 14-way divider golf bag you got for your birthday, but will it go in a sports car’s boot? Hmm… Perhaps a bigger vehicle might be more suitable all round?
Finally, watch out for this old trick
In April this year, Pete in Chorleywood (Hertfordshire) thought he’d better grab a finance deal while he could, to his regret: “I fell for the oldest trick in the book, when it comes to how dodgy car finance companies operate.”
The broker urged him to sign up for what looked like an amazing deal (which turned out to be not so great) insisting that it was a time-limited offer. ‘It really is now or never, sir!’, he said. As Pete says, “That proved to be a pack of lies. But by the time I realised, I had signed the form, only to see a better deal advertised elsewhere. Aargh!”
Just keep your eyes peeled – and apply some commonsense when you start evaluating the deals out there. If you’re a regular reader of this blog, you’ll see we have plenty of good advice