If purchasing a vehicle using cash isn’t the right choice for you, exploring finance options to help with the cost of ownership could be a good next step. Whilst it is a popular way for people to purchase a brand-new car, due to the expense involved, many people also take out car loans to cover the purchase of used or second hand cars. Whether you have taken finance options out previously, or it is your first time looking at purchasing a car in this way, here are some quick tips on how to get the car loan you need.
Ensure You Can Afford Repayments
Before considering applying for a car loan, you will need to ensure you can afford to do so. Working out your affordability is important so that you do not take on a loan you cannot maintain. It’s a good idea to compare your income and outgoings and know exactly how much you can comfortably afford towards repayments. This way, once you have found a second-hand car you want to buy, you will already know if the repayment term offered matches your requirements. If possible, it is good to ask if there is an option to pay more upfront as a larger deposit to help reduce the total amount you will need to borrow. This can help make the repayment term much easier to maintain each month as the repayments could be lower.
Find Specialist Car Loan Lenders
If you have a poor credit history, you may have found applying for car finance difficult. Many lenders require applicants to have a good credit history, so that there is less risk when lending to you. The good news is there are specialist car loan lenders willing to help those with bad credit. You will need to demonstrate the ability to afford the repayments, and if so, the chances of being approved for the car loan you want is improved. Many bank lenders use automated decision-making systems, meaning if your credit score isn’t high enough, your application can be declined very quickly. The great thing about specialist lenders is that they will take the time to consider your application, ability to repay and financial history as part of the approval process, making it easier for you to get the car loan you need, despite a poor credit history.
Avoid Multiple Applications
One thing to avoid when looking for a car loan is applying for multiple loan applications that use a soft or hard credit search in a short space of time, as this will impact your credit rating. This will also increase the chance of receiving declined decisions, so taking the time to find the right lender for your situation is best. When accessing your credit file, the lender will be able to see if you have applied recently for other loans, so having a record of multiple applications over a short period could look negative. It will also reduce your credit score, so if you already have poor credit, this could make the situation worse. By reducing the number of full applications, you make, helped by finding the right type of car loan lender, you can increase your chances of being approved.
By taking into consideration the above, you could increase your chances of successfully getting approved for a car loan. Affordability is key and taking the time to understand the loan you need, as well as whether you require a specialist lender, can make the experience much easier for you.
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