How to get approved for car finance
You may think that having bad credit will disqualify you from being able to get a car on finance. This isn’t true – there are companies that can help you get a car, even if you do have bad credit. That being said, the better your credit score, the more likely you are to be approved and the more you can borrow towards the price of your dream car. It is always best to make sure you are in the strongest position possible. With that in mind, we’ll cover the basic methods you can use to improve your credit score and your chances of being approved for car finance.
Improve your credit score
The better your credit rating, the more likely you are to be approved for car finance. Your credit rating comes from your financial history – how much you’ve borrowed in the past and whether or not you have paid back your debts and whether or not you did so on time. It is sourced from places like banks and credit card companies. To find out what your score is currently, you can find out for free online with companies like Clear Score, Experian and Equifax. The simplest way to improve your credit rating is to borrow and then pay back your debts on time. The more examples of this there are, the better your credit rating will be. Missed or late payments will negatively impact your score, as will defaults and CCJs. There are some situations where you will not be able to get car finance no matter what. Bankruptcy (when you are officially unable to pay off your debts) is one of these.
Increase your chances of getting approved
Other than paying back your debts and avoiding the negatives already discussed (defaults and CCJs), there are some positive measures you can take that will improve your chances.
Put down a bigger deposit – The larger the deposit you put down on your car, the lower your monthly payments will be, and the more likely you are to be approved for the process. It might take longer to save the added amount but could be worth it if it means you end up getting approved. A larger deposit also reduces the interest you have to pay on the loan.
Make a joint application – If you know anybody with a better credit score than you, then you could consider a joint car finance application. If a partner, friend or family member with good credit is willing to join you in the process, it will increase your chances of getting approved.
Consider guarantor car finance – As mentioned in the point above, if you have a partner, friend or family member who is willing to help, it can make the process of applying for car finance easier. In this case, they would become a guarantor, which is a person who promises to pay any payments that you miss. There used to be tighter restrictions on guarantors. They used to have to be related to you and they had to own their own home. This no longer being the case, it’s easier than ever to get guarantor car finance.
Register to vote – Getting yourself registered on the electoral roll can actually impact your chances of getting approved for car finance. It allows lenders to trace your address history and easily identify you. It is one of the easiest things to do because it only takes a few minutes and can be done online.
Hopefully the advice above can help you on your way to getting the perfect car. Even if you’re unable to affect your credit score much, it’s still worth applying for car finance. There are companies that specialise in bad credit car finance and can help you as long as you meet a few basic criteria – You are 18 years old or above, you hold a full UK driving licence, you’ve lived in the UK for 3 years or more, you have a bank account and you can prove that the monthly payments are manageable.
