Looking for a car loan? Struggling the get approved or haven’t had finance before and want to know more? Car loans can be confusing and if you’ve already been refused car finance then you may think all hope is lost. However, there are a few ways in which you can increase your chances of being approved for a car loan.
Check your credit file
If you haven’t checked your credit file in a while, then why not? It is recommended that you check your credit file monthly to make sure everything is in order. You can use a credit referencing agent online for free to check your credit file. Mistakes on your credit file can decrease your chances of getting approved and can also be costly. If you spot any mistakes on your credit file, you should contact your credit referencing agency to fix it immediately.
Shop around for the best rates
There are many online car finance companies who can offer you a great deal. Many people still think you can only get finance at a dealership. However, this isn’t true. You can apply for finance online and then walk into a car dealership just like a cash buyer, but you’ve already sorted your finance! If you need a refinance car loan you can also do that online or in person. If you are checking your eligibility or applying for finance, you should stick to soft search credit checks only. A hard search is performed by lenders to take a look at your full credit file and is also recorded on your credit file. Lenders can then also see if you were approved or declined for the credit you applied for. If you are shopping around for car finance deals, make sure you stick to soft searches only.
Brush up on your car finance jargon
Did you know that 1 in 10 people in the UK are able to identify all the jargon used in car finance? Car finance can be confusing, and it can put you off if you’re not exactly sure what you’re signing up for. Do your research first and check out some of the most common words and phrases used in car finance deals. If you’re taking out finance at a dealership or an online finance broker, then don’t be scared to ask your representative as many questions as you need to. You’ll feel more comfortable and in control of your car loan if you fully understand it.
Save up for a deposit
Having a car loan deposit can increase your chances of getting approved. If you are worried about applying for car finance with bad credit and being declined, you could consider a down payment to strengthen your application. When you put down a deposit for car finance, you don’t have to borrow as much from the finance company which can reduce your monthly payments and reduce the overall interest you have to pay.
Work out your car finance budget
Car finance can be really exciting and knowing you can get a newer car from a reasonable monthly payment can be very attractive. However, you should also factor in other costs into your finance budget. Running and maintaining a car can be expensive. You will also need to factor in other payments such as car insurance, road tax, fuel costs, breakdown cover, servicing and MOT costs.