Before you apply for car finance! (Quick Read)
More young drivers than ever are now buying their car on finance! But do you know what to do before you apply for car finance
Check your credit score before you apply for car finance!
Your credit rating is the main item considered by the Lender when you apply for car finance.
Don’t apply for credit without checking your credit score first because:
- Not being registered on the electoral roll can have a negative effect on your credit rating.
- The type or amount of finance applied for may require a higher credit rating than you have.
- A negative mark goes against your credit score each time a loan application is unsuccessful.
Equifax provides a free credit report (On a 30-day free trial with the option to cancel your subscription).
Plan a budget when you buy a car
The best way to work out how much you can afford for a car is to list the price of the car and the running costs, on a monthly basis:
- Divide the price of the car by the number of months you will be making repayments.
- Add the cost of driver insurance each month.
- Add the cost of vehicle tax each month.
- Add the cost of your expected fuel usage each month.
- Add the cost of maintenance each month (include servicing and replacement tyres).
Of course, you can reduce the amount of finance needed if you have a car trade in or sell, either privately,or part exchange.
How to apply for a car loan
Read and understand the different types of car finance available to you! Before you sign on the dotted line!
Don’t commit yourself to borrow more than have you can afford.
Remember when you buy a car on finance you are involved in two separate purchases. No doubt you will be very careful with your choice of car and the price you pay but don’t forget to be equally on the ball when selecting your choice of car finance.
Do you know the car finance jargon?
Don’t get confused, understand the financial terms.
- Do you know what a balloon payment is?
- How is the GMFV calculated?