5 Things To Do Before You Apply for Car Finance
AD| Car finance is one of the most popular ways to fund your next car purchase. Drivers like car finance because it gives them more flexibility and the ability to get a car but pay for it over a set period of time. When compared to buying with cash, this can usually mean that you can get a better car than you first thought, too! Before you start applying for car finance, it’s worth remembering that it’s never guaranteed you will get offered a car finance approval. So, the guide below has been designed to make your life a bit easier and looks at the top 5 things you should do even before you start making applications for finance.
1. Calculate your loan
When it comes to getting a car, your monthly payments are really important. Your budget for car finance should be realistic and affordable, as it’s crucial that you can meet each payment every month until the agreed end date. Failing to stick to the terms of your credit agreement can lead to the car being takes off you if it’s a secured loan, which can lead to more serious financial implications. Usually, car finance deals are spread over 3–5 years and your loan term can affect how much you pay back each month. If you’re not sure how much you can afford to borrow, you can use a free car finance payment calculator to see how much your monthly payments could be before you even start applying.
2. Save money for a deposit
When it comes to car finance deposits, there are some agreements which require you to put down some money to help secure the deal. It’s worth knowing before you start applying, so you can either have time to save or know how much you’ll need to fork out. Whilst there are any car finance deals with no deposit, it can be better to have something to put down at the start of your agreement. Not only can it increase the likelihood of getting an approval, but it also means you aren’t borrowing as much from the lender. A deposit contribution reduces the loan amount, which can make your monthly payments cheaper and save you money as a driver.
3. Check your credit
Before you make any application for finance or credit, it’s always best to check your credit first. You’d be surprised how many drivers look for finance without know where their current credit score stands. It can be a good idea to check your credit for car finance before you even start applying. Credit score is important to car finance as it helps the lenders to assess the level of risk. If you have a low credit score due to missed or late payments, lenders may think you are more likely to default on their loans, too. This can make it harder to get accepted or means you may be offered a higher interest rate to secure the deal. In this instance, it can be worth taking some time to work on your credit score before you start annoying to help make your deal more affordable.
4. Research different lenders
There are so many car finance lenders who can offer you a finance deal, and it can be hard to know which one to choose. Lenders may also be suited to some drivers over others. If you’re struggling to get approved due to bad credit, it may not be worth applying with mainstream or prime lenders, and instead you could find a lender who specialises in no credit or bad credit finance. You could also consider using a car finance broker to help find the best deal for you. Car finance brokers have access to multiple finance lenders at once and means you can save time but letting them do the leg work for you!
5. Take your time and ask questions
When it comes to getting a car on finance, it’s important that you don’t rush into the first deal that you are different. Car finance agreements last for a number of years, so it’s significant that you get eh right deal with affordable payments. If you’re ready to apply, it can be a good idea to think about the sort of car you need and want, how much you want to pay and how you’re going to afford it. Don’t be scared to take your time when making a decision, researching car finance and asking as many questions as you need to in order to make an informed decision.
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