How to increase your chances of getting finance
With the cost of a new car in the UK typically running anywhere from about £12,000 to £36,000 depending on the model, it’s unsurprising that for the vast majority of people, car finance is a necessity rather than a choice.
However, this is not to say that actually getting finance is straightforward. Therefore, our team here at Car Finance Genie thought we’d take a closer look at some of the most common pitfalls in applying for car finance, as well as what lenders are looking for, and most importantly, how to improve your chances of getting approved for finance.
Undoubtedly the biggest barrier to a successful finance application is a low credit score. Your credit report gives an overview of your credit history, and your credit score is in turn based on this. As this is the primary tool lenders will use to assess your suitability for a loan, it makes sense to not only access your report but also understand it. This is also a good practice to get into regardless to ensure there aren’t any nasty surprises lurking.
However, not all credit reports are created equal. There are three main credit reference agencies in the UK: Equifax, Experian and TransUnion. We would recommend looking for a service that will access all three. After all, you won’t know which one the lender might be referencing when examining your application.
If your credit score is on the lower end of the scale, there are things you can do to improve it. Some simpler options involve reading the report and identifying any errors, such as if the wrong address is listed. Other sensible steps include closing any accounts that you no longer use, and if you haven’t done so already, signing up for the electoral roll.
Aside from minor corrections, you may also wish to look into getting a credit building card. These are products designed to help those with a poor or non-existent credit history build their credit rating. It’s not a quick fix by any means, but depending on your circumstances, it may be the best option.
So now you have a decent credit score. What’s next? Well, in addition to credit reports, another aspect that lenders will assess is your household income in relation to the monthly payments.
Lenders are mainly concerned with risk – after all, they are taking a gamble as to whether you will be able to make repayments. Even if your credit history is excellent, the monthly payments may be too high. By increasing your initial deposit, you can make your monthly payments smaller and in turn, more manageable. This reduces the aforementioned risk in the eyes of the lender.
Don’t be afraid to shop around – find the right lender for you
Make sure to do thorough research on the lenders available to you to find which is most suited to your situation. Armed with your credit report and the maximum deposit you can afford, you will be better equipped to make an informed choice regarding the best option for you.
Selecting a lender that you are most likely to be accepted by also reduces the chance of being rejected, which could potentially impact your credit score.
Following these pointers should take you one step closer to getting behind the car you’ve always wanted, with the help of the perfect car finance deal. Good luck!