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Getting car credit.

When purchasing any type of car whether it is brand new from the showroom or a good condition second hand model, you will probably have to take out car credit. This means that you will have to borrow the money from somewhere to finance your new purchase. There are several ways that you can do this and the most suitable one will be based on your circumstances and the ability to repay what you owe, your credit rating and many other factors.

When purchasing any type of car whether it is brand new from the showroom or a good condition second hand model, you will probably have to take out car credit. This means that you will have to borrow the money from somewhere to finance your new purchase. There are several ways that you can do this and the most suitable one will be based on your circumstances and the ability to repay what you owe, your credit rating and many other factors.


Your credit file and borrowing


If you are looking to take out a personal loan as your means of paying for your car then one of the first things looked at by the proposed lender is your credit rating. Your credit history is stored in your credit file and whenever you apply for borrowing of any kind the lender will look at this history before making a decision. Your credit file can stop you being approved for a loan so when choosing this method of borrowing the better your rating the more chance you will have of getting accepted for a loan and of getting a low interest rate on the loan. If you have a bad rating you could have to take out a bad credit loan or a secured loan, which means you secure something of value against the money you are borrowing. When taking this choice of finance you could sell the car at anytime providing you kept up with the loan repayments.


Hire purchase and your credit file


If taking hire purchase then your credit file will be used again and you may be turned down or you could be asked to pay a large sum by way of a deposit on the car if you have less than a perfect credit rating. Anyone regardless of their rating will have to pay at least a 10% deposit before driving away with the car. You could then spread the cost of the borrowing out over a period of time. When considering this choice of finance you have to consider you will not be able to sell the car until you had paid off the hire purchase agreement.


Of course when getting car credit the type of purchase and where from will be a factor. If buying from the showroom then you could take a personal loan or hire purchase option. If buying privately then the personal loan option could be taken as you will have cash in the hand to buy your car. 

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Back to July 2009

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