Financing A Car

A Rundown of What You Need When Financing A Car

Last updated on June 23rd, 2022 at 04:28 am

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When looking to purchase a car, there are plenty of options that need consideration before driving away from the showroom. You’ve worked out all the features you need from your next vehicle purchase, from the fuel efficiency to the engine size and even how to connect your phone to listen to your driving playlists. But what about actually paying for the vehicle? Will you have enough cash saved to make an outright purchase, or will you be looking for car finance to spread the costs. If it’s the latter, here are a few things you’ll need to consider prior to purchase.

What’s Your Current Credit Rating?

Before you complete an application for car finance, you should check to see what your current credit score is as it could be the key to whether your chosen lender will approve or decline you. Rather than just hoping for the best and submitting your application, by knowing what your current credit rating is, you’ll be able to determine which lenders are best placed to help you. For example, if you have a poor or bad credit score (get your credit report online), this could limit the amount of choice available to you and you are more likely to be declined. To avoid getting declined unnecessarily in this situation and making your credit rating even worse, look for specialist lenders who can help you with bad credit car finance options. This way you’ll increase your chances of being approved for the car finance you need, whilst also finding the perfect vehicle to match your requirements.

Do You Have the Necessary Documents?

Many lenders will need to assess your affordability alongside your credit rating to not only check your financial history but also if you can afford the repayments offered to you. Make sure you have proof of ID such as a passport or driving license to prove your identity, as well as your address history details and also your most recent bank statements. Whilst not all lenders will follow the exact same criteria, it’s a good idea to have these ready to hand just in case the lender requests them. Check the lender’s eligibility criteria and be as prepared as possible before clicking that apply now button.

What Type of Payments Can You Afford?

The car you want to finance needs to align with how much you can afford to pay and the frequency of doing so. Whether your income is weekly or monthly, fixed or more flexible, you’ll need the car finance to work for you. The easiest way to help determine what you can afford is by spending time going through your full income and outgoings to find out how much disposable income you have to play with. You may already think you have plenty left over each month, but it’s recommended to do this before applying for new finance. The last thing you want is to take on a financial commitment that you’ll then struggle to maintain. Review your finances and hopefully, it will leave you with a figure you can afford to cover the repayments.