Looking to finance a new car?

Oct 26

Looking to finance a new car?

Buying a new car is one of those times when most people cast around for the finance to do so. According to a report in the Guardian newspaper on the 16th of August 2017, 1 million new cars and 1.2 million second hand cars were bought with the help of car finance during the previous 12 months.

Steps to securing car finance

Arranging car loans or other car finance is generally straight forward, but may prove trickier if you have less than healthy credit – so let’s take a step by step look at what is typically involved:

How much

  • one of your first decisions is how much to borrow – this needs to be a reasonable estimate based on how much you want to spend on the purchase, how much you are able to repay each month, and what, if any, deposit you are able to put down;

For how long

  • the size of the loan and how long you want to borrow it also determines the amount you need to repay each month – the longer the period, the lower your monthly repayments, but the more you are going to be paying in interest on the loan;

Rate of interest

  • the total cost of your car loan depends on the amount borrowed, the size of any deposit you have to offer, the length of the loan and the rate of interest offered by the car finance company – which is also affected by your credit status;
  • lenders are competitive, so you might want to choose carefully amongst those lenders offering competitive rates of interest that reflect your personal circumstances;

Credit checks

  • a critical step in the application for any car loan is a check of your credit status – no lender is going to advance any credit without such a check;
  • this is the stage at which you might face disappointment if you have poor or bad credit (because of your failure to manage past borrowing, for example);
  • if you also lack the funds to put down as a deposit, that may make your situation still worse;

Specialist lenders

  • in any event – but especially if you require bad credit car finance or no deposit car finance – the solution may lie with a specialist broker able to offer competitive rates even when your financial circumstances might otherwise rule out the possibility of car finance;

“Soft” credit checks

  • such specialist lenders also help you to avoid making your credit status still worse by having successive lenders reject your applications for finance;
  • instead, they are likely first to conduct a “soft” credit check or “quotation search” to establish which lenders are most likely to accept your application, given your particular financial circumstances;

Buy your car!

  • with your car finance safely in the bag, your final step is to go out and buy your car – from the dealer of your choice.

Follow these simple steps and your way to arranging car finance is likely to be smooth and hassle-free.