Getting Ready to Apply for Car Finance: What You Need to Know

Know Your Credit Score

Your credit score is a crucial aspect of your car finance options. Each of the UK’s three primary credit reference agencies calculates your score differently. Knowing your credit score and how it stands against the national average can help you determine if a car finance loan suits you. Don’t worry, checking your credit score is free! You can also check your likelihood of being approved for credit with our online car finance credit check.

Improve Your Credit Score

If your credit score needs a bit of a boost, don't stress. There are various ways to improve it. Factors contributing to your score include your credit application history, address history, and payment history. Small changes like being on the electoral roll, paying bills timely, checking for credit report errors, and maintaining a low credit utilization ratio can significantly improve your score.

Understand Your Options

One of the fantastic aspects of car finance is its versatility. There are numerous options available that can be tailored to your circumstances, car preference, and usage. You've probably heard of HP, PCP, and personal loans, but leasing, guarantor loans, and lease purchase are all viable options. There are even deals with no deposit. Explore the pros and cons of every car finance option (your account manager can assist you with this.)

Set Your Budget

Your budget is a critical factor in determining the right car finance option for you. Decide how much you’re comfortable spending per month and overall before applying for finance. A PCP agreement might offer lower monthly payments, but remember, you may need to make a large balloon payment at the end. Don’t forget to account for additional costs such as service, MOT, car tax, fuel, and maintenance when crafting your budget.

Prepare Your Paperwork

Different lenders will ask for different documents, but some remain constant across the board. It's a good idea to locate your driving licence, ID (e.g., passport), proof of address, and payslips. You don’t need to print everything out immediately, but knowing where to find them can speed up the application process.

Applying for car finance doesn't need to be a daunting task. With these tips, you'll be well-prepared to navigate the process smoothly. Happy car hunting!