The Role of Your Credit Report in Getting You Car Finance

For an aspiring car owner, there is really no need to worry about getting car finance as there are so many different types of car finances available, unless he has got a bad credit.

Well, even those having a bad credit don’t need to worry because they too can get guaranteed car finance. But in any case, while planning to purchase a new car and get finance for it, you should remember that a credit check is an important part of the process of getting car finance.

Finance companies are interested in knowing about your credit history so as to be able to evaluate what the odds are of repayment of loan by you. Although there are possibilities of getting a car finance even while having a bad credit, it’s important for you to know and understand how your credit report can affect your likeliness of getting car finance, various kinds of car loans available and what you can do if your application for finance gets rejected. Here is some useful information.

Effect of Credit Scores on Car Finance

Credit scores work as a tool for lending companies and credit reference agencies and it can also give you an indication of what chances you have to successfully get car finance.

Your credit score is not going to directly affect the decision of a lender, but provides you an idea of your chances to be offered credit. Lending companies also use their own credit score which is created on the basis of various pieces of information such as your credit report and has a role in their decision-making process.

Your credit report is helpful for lenders since, along with other things, it shows them if you have repaid loans in the past consistently or not. If any defaults or missed payments are seen, they may indicate that you are less likely to repay the new finance. If you are already paying off several loans or are close to your total credit limit, this might show that you are over-reliant on credit.

The information in your credit report as well as details in your application will be used by a lender to make a final decision. A sound credit report is not the only important factor, but can have a huge role to play in your likeliness of getting a loan. Still there are excellent options where you can get bad credit car finance.

Various Types of Car Finances

You’ll find various types of finance for a car, some of them being more suitable for your needs than others. Therefore it’s worth researching these various options keenly before applying for car finance.

Personal Car Finance

The most common among car finance options is a personal loan. This can be obtained through your bank or building society and differ in terms of interest rate and repayment period. The terms will be based on the amount you need to borrow and the solidity of your credit history.

A personal loan may have the monthly repayments higher than that of other types of finances; however, the total amount paid is usually less than others. A personal loan allows you to own the car outright, once the finance has been handed over and the debt you owe is to the bank or building society. This may not always be the cheapest option and can be hard to get if your credit history is limited.

Hire Purchase

Hire purchase or HP is a quite straightforward finance agreement where monthly payments are made over a set period after an initial deposit. You won’t own the car outright till the final payment is made; thus if you fail to keep up repayments, you would lose the car too.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is a more popular form of HP. It’s more complicated than the regular Hire Purchase as the monthly payments are associated to the depreciation of the value of the car. Still it begins with a deposit and a set term, but if you wish to keep the car, you need to make something known as a “balloon” payment in the end. This amount equates to the car’s minimum future value.

If You are Rejected Credit for a Car

Before even applying for car finance, you must research what chances you have to get the loan. Going through your credit report can allow you to know if it contains any recent issues that lenders may find problematic and it also provides you an opportunity to fill up any missing information.

You must also calculate what the total monthly payments will be (including interest and fees) and then plan a budget of how to be able to make payments.

If your application for the finance is rejected, you may have to spot and address any problems with your credit history. Confirm your registration on the electoral roll, so lending companies can cross-check your identity and pay off outstanding debts wherever possible. If there are any defaults, you’ve missed payments or even Country Court Judgements (CCJs), your credit history may take a while to improve.

Shopping around may help, as being rejected by one lender doesn’t mean that you’ll be rejected by all other lenders. Nevertheless, too many applications in a short timeframe can give a troublesome signal to lenders. It might be better if you wait till your credit history gains better health, prior to applying again.

Car Finance Bad Credit offers you car finance even if you have poor credit history and is blacklisted. Besides helping everyone to get car loans easily, they are specialised in getting those with a poor credit history a loan to purchase a car.

Bad Credit Car Finance works with all of UK’s approved top lenders. You can allow them compare all market and choose the best deal for you. If you have a bad credit history, it can be easily overcome, but their team is amazingly experienced in arranging various car finances.

Their application forms are quick and easy to fill and will make your job successful.

They even assist you in filling in the forms for you upon request.

They have a huge experience in finance and loans business and are the first point for many to call to confirm and finance loans for families with poor credit rating.

So, are you now worry-free from the stress of having a bad credit? Apply for a car loan and enjoy owning the car.

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