Car Finance PaperworkAs with most long-term purchases, you need to be 100 per cent sure as to what you’re signing up to, and with car finance that’s no different.

When looking to get credit for a new or used car, you’re likely to see a plethora of incentives from finance companies and dealerships alike. Some of these can often lead you into a good deal, but it is always important to be vigilant as some will attempt to offer what they can’t follow through on, while others may look to put you in a deal you’d rather not be in.

No guarantees

Arguably one of the biggest car finance myths around is that anyone can get car finance. It’s true that companies and dealerships are trying to make it easier for people to get car finance, which is a good thing, but anyone who says they can guarantee a customer car finance before going through the relevant checks is trying to deceive.

Companies are attempting to set the record straight on those offering guaranteed car finance. All lenders have a number of criteria that a customer must pass to be able to get car finance because at the end of the day, they have to know how much of a risk it will be to take on each and every customer.

Those with gleaming credit histories will obviously stand the greatest chance of being approved for finance, and even those with CCJs and defaults can still attain credit for a new car, but it would be unwise to be so naive to think you’re guaranteed to get finance. Before applying, consider the elements that help towards a positive credit record, such as being on the electoral roll, owning your own home, proving you can pay off loans in time and not breaking any credit limits. It might also be advised to get a full credit check through a company such as Experian, although this will usually come with a fee.

Deal or no deal – it’s up to you

The modern era of car finance sees several kinds of deals open to you, which each different option offering various avenues as to how you pay for your car and it’s important you go into the purchase knowing exactly which you want to take.

Those looking to own their car outright will likely go down the hire purchase route, which usually sees a deposit being put down before a set number of monthly payments that are made until the car and its interest is paid off. If you’re not sure if you’re interested in owning the car of interest or you’d like to have lower monthly payments, then personal contract purchase would be for you, where most of the car’s value is placed in a lump sum payment at the end of the deal and you effectively pay off the vehicle’s depreciation until that point. Meanwhile, personal contract hire means you will never own the car and you practically pay to use the car over the duration of the deal then hand it back.

Most dealers will offer you all car finance variations (unless the car doesn’t meet the criteria), while car finance companies will just lend you the money you need to pay off the car. If dealing with the former, there may come an occasion when they will try to push you onto a certain type of deal, but it is important to stand firm with the kind of deal that meets your requirements as a buyer and not feel forced into something you’ll regret down the line.

Play it by your terms

Getting the best deal possible when trying to attain car finance should be everyone’s goal, and there a few ways to ensure this.

First of all and something we’ve already touched upon already, is to put yourself in the best position possible before you’ve even applied. Even if it takes an extra few months, it can be very worth your while to get your finances in order before applying for car credit in order to get a better deal in the long term. On the occasion that your finances still aren’t the best when it comes to getting a car, don’t be too disheartened as you may still be able to get accepted, but be aware that your interest rate will not likely be below 35% APR.

If and when you’ve been accepted, it’s time to think about making the deal match what you want to pay. The element that can help you out from the start is your deposit; the bigger the deposit, the smaller the payments will be and your current car being used as a part exchange can act as this deposit.

If you’re looking to make your monthly payment cost to be as minimal as possible, then a combination of a big deposit and a long contract will do the trick, but take into account that the longer the contract the more interest you will pay on the car. Generally, the best compromise is to have a decent deposit and then spread the payments over three years (36 months) for a good, balanced deal that should have reasonable monthly payments.


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