How to apply for a car loan
More young drivers than ever are now buying their car on finance but do you know how to apply for a car loan and the information required by the finance company?
Look for the best available finance deal!
Don’t forget when you buy a car on finance you are involved in two separate deals.
No doubt you will take ages and be fussy about your choice of car and even include a clever bit of bargaining over the price. Be just as thorough and look for the best finance deal available to you.
Filling out your application for car finance
First, a note of caution you might be surprised just how many people make a false statement when they apply for a loan.
However, keen you are to get finance for a car be honest when completing your application, making a false statement is a fraud, and you will probably get caught out.
Is the type of loan you’re applying for the right one for you? Is your credit score sufficient to qualify you for this kind of loan?
Are you aware of any penalty clauses or extra charges in the agreement? And can you meet the monthly repayments?
The Lender will ask you to provide the following details:
- Personal details.
- Employment details and history.
- Bank details.
- Driving licence.
- Proof of address.
- Proof of income.
And provide the following ID and documents:
- Proof of age ID such as a passport.
- Your driving licence.
- Proof of your UK home address.
- Proof of your income.
Be sure you fully understand the paperwork and how the finance contract works before signing on the dotted line.
You can always refer to our car finance jargon buster to help you out.
Remember once you have signed you are in a legally binding contract.
Check your credit score – even if you have good credit history
When you apply for a car loan the lender will do a credit check on you as part of the process; you really should know what your credit score is before making any application.
Check your credit score with a credit agency such as Equifax.
Be aware even credit reference agencies make mistakes that can reflect your credit score incorrectly.
Set a budget for the car – one you can afford
How much can you afford to spend on the car?
Work out a budget to determine how much you can afford, include:
- Monthly repayments on the car finance
- Vehicle tax
- Breakdown cover
- And don’t forget the projected fuel cost.
Financial Conduct Authority FCA
Very simple this bit, check out that the bank, finance company or lender are authorised by the Financial Conduct Authority FCA, don’t even consider taking out finance from a company that is not regulated by the FCA.