Car Finance for a New or Used carIf you are in the market for another car, unless you are one of the very lucky people who could afford to buy one outright, you may need to consider some form of car finance.
If you are in the market for another car, unless you are one of the very lucky people who could afford to buy one outright, you may need to consider some form of car finance.
Your choices on how to go about this may typically be:
• a bank loan or finance from one of the high street lenders;
• a hire purchase deal from a car dealership ;
• one of the specialist motoring websites.
Banks are sometimes uneasy about granting a car loan. They may want to know what it is, how old it is, what its re-sale value would be and so on, all before they agree to the loan. So you may be in the position of finding the car and then trying to persuade them to arrange the finance.
This may be okay if the seller of the vehicle is happy to wait until the bank has processed the loan application, sorted out all of the details out and then released the money but by that stage the vehicle may have been sold to another.
Forecourt car dealers
Getting your car finance from a car dealership may be a convenient way of doing things. Loans of this nature generally may have to be accompanied by a deposit from you and they will rarely be available for 100 per cent of the purchase price. Their finance will typically only apply to the vehicles they have in stock at that time.
If you accept the loan offer from the dealership you may not know whether it is good value for money or not. Could you have got a cheaper deal for the same car elsewhere? You may never know!
Specialist motoring websites & dealers
It may be simpler using one of the specialist motoring websites which could allow you to find your car, arrange the finance and then make the purchase all at the one time.
Whatever your chosen route to get your car finance, at some point in the procedure your potential lender may want carry out a credit scoring on you. The better your credit score the better your deal is likely to be.
Your credit score may be affected by things such as:
• Are you in regular employment?
• Do you have a good record of paying other loans according to the agreed repayment schedule?
• Have you any CCJ’s? (county court judgements against you)
• Are you a homeowner or do you rent?
• Are you on the electoral register?
All of these things and more, taken together give the lender an idea of how good a risk you are. The results of this may ultimately determine how much you can borrow, the interest rate you are charged and the repayment period.
The good news is that the specialist online car dealers may also be able to help find car finance for you even if you have a less-than-perfect credit history.
Posted by Edwin Miles on