Is it hard to get car finance? Breaking down the process

Is it hard to get car finance? Breaking down the process

Ever wondered about car finance but worry that it is hard to get? We’ve got you covered. Gain practical insights and useful tips to help you on your way to car finance success.

Is it hard to get car finance?

There is no one-size-fits-all answer to this question because each car finance application will be assessed on a case-by-case basis. First things first though – to be eligible for car finance at all, you must be at least 18 years old, be a UK resident of at least three years, and demonstrate that you can afford the repayments.

If you can say yes to these basic requirements, you have a good credit rating and you can show that you are able to cover your repayments, then you have a good chance of being approved for car finance.

If your credit history isn’t great, you may still be offered finance, but you can expect to pay a higher rate of interest on any contract. The single best thing you can do to increase your chances of securing an excellent car finance deal is to get your credit score in shape.

Will I qualify for car finance?

The car finance application process itself is fairly simple, but there is no guarantee at the end of it. A useful way to work out whether you are likely to qualify for car finance – and to boost your chances of being successful in any application – is to use a finance calculator to see what your payments could look like, find a car that fits your budget, and then apply for a personalised quote. (More on this in the car finance process section below.) But before you do any of that, let’s take a look at the factors that can help or hold you back from your car finance goal.

Factors that can make it harder to qualify for car finance include:

  • Having a poor credit score

  • Being in debt

  • Irregular earnings

  • Being a young driver

  • Too many applications for other sorts of credit

  • A recent unsuccessful car finance application

On the flipside, factors that make it more likely to be approved for finance include:

  • Having a good credit rating

  • A stable income

  • Having manageable or little debt

  • Being able to demonstrate that you reliably pay your bills on time

  • A full, clean driving licence

The car finance process

Any kind of big financial commitment can be a daunting prospect, but the actual nitty-gritty of applying for car finance is usually pretty straightforward. Here’s how it works.

Choose your car finance

Firstly, have a think about which kind of car finance will suit your circumstances best. There are several different types to consider, and it’s important to do your research before committing to any legal contract, so be sure you understand the pros and cons of each, so you can make the right choice for you.

Use a car finance calculator

Next, figure out your budget with the help of an online car finance calculator. Lots of finance providers offer these on their websites – they are completely free to use and they won’t affect your credit score. With a finance calculator you can experiment with different loan terms and amounts without committing, helping you to figure out exactly what you can afford. By helping you to decide what your financial commitments could look like over a given timeframe, a finance calculator can give you a good indication as to whether car finance is a sensible choice for you.

Get a quote

Now you are ready to apply for a no obligation, personalised quote from your lender of choice. During this process the finance provider will run a soft credit check on you and give you a quote for car finance based on your desired loan amount, your earnings and estimated credit rating.

Find your perfect car

Once that’s sorted and you’re happy that the quote you’ve received fits your budget, you are ready for the fun part: choosing a car!

After you have found the perfect set of wheels, then you are ready to make a full application for car finance.

Make a full application for car finance

To do this, you will need to provide photo ID and proof of address, proof of earnings and a full driving licence, along with your desired loan amount and timeframe. Make sure all these documents are readily available. Depending on your circumstances, you may be asked to supply other documents as well; the lender will let you know if this is the case.

Then, there’ll be a short wait for a decision – usually between 1-2 working days, sometimes sooner. Once your finance has been approved, you can arrange to pick up your new car or have it delivered – it’s up to you! There is usually a cooling off period of between 7-14 days, during which you can return the car free of charge should you decide it’s not for you.

For the best rates, get your credit score in shape

The success (or otherwise) of any car finance application will largely be driven by your credit score and your credit history. If you have great credit, you will be offered the best rates and the lower your total repayment will be. If your credit history is patchy, you may still be offered car finance but you can expect to pay a higher rate of interest – and a larger overall repayment – than someone with a good credit rating.

If your credit score is poor, don’t panic. While there is no immediate fix, there are lots of things you can do to improve your credit score and your overall credit health. Get in the habit of checking your own credit score regularly, a couple of times a year, to see where you’re at. Make sure your details are all up to date and that you are on the electoral register. Be proactive about making changes to your spending habits if necessary.

The best thing you can do to improve your credit health is pay off any outstanding debts. If you are struggling to do this, there are organisations that can help

What is a soft credit check?

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