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Common Misconceptions About Car Finance

Are you hesitant to get car financing? 🤔 Many car buyers miss out on the opportunity to get great deals because of their misconceptions about car finance. Some people are too worried about it or are simply convinced that they won’t get approved if they apply. But the truth about car finance is it’s quite easy and straightforward to apply for a loan these days. Many car finance companies process applications online, which makes it convenient and fast for car buyers to get the vehicle they want. However, you must also be aware of the risks of getting car finance, for example if you do not make your repayments as agreed, your car may be repossessed and your credit rating may also be affected.

If you are hesitating or are worried about applying for car finance, read this article, so we can help you understand some of the common misconceptions about it. Hopefully, by the end of this article, you’ll be more confident and knowledgeable about the topic, so if you decide to apply for car finance, you'll have a stress-free experience! 

21 is the Age Requirement to Apply for Car Finance

Maybe you’re a young driver who’s only 18 years old. You now know the freedom and excitement that driving brings and you can’t wait to have your own ride. Many people believe that you need to be 21 before you can apply for car finance. This is not true at all. The minimum age requirement is 18 with some lenders, although being 18 years old doesn't guarantee that you'll be approved for finance. There are other factors that the lender checks in order to see if you're eligible. 

When you do apply for car finance, you'll often need to verify your driver’s licence. A lot of car finance companies look for this as proof of identity. While they may also accept other IDs like passports, having your driver’s licence will also show the lender that you’re legally allowed to drive already. 

Other documents you need to prepare would be your proof of address with your utility bills or bank statements, details of your employment, and be sure that you’ve already registered to vote. If you’re not working yet but you want to get car finance, some lenders may accept a guarantor to help you out. This also might help you if you have a limited credit history due to your age. 

Your guarantor can be your parent. They will be the one responsible to pay for the monthly repayments if you’re unable to. You may decide to discuss with your parents how you’re going to pay for the car. As long as you can keep up with the payments to the car finance company, then you’ll be alright and you can continue to enjoy driving your car. 

You Can’t Get Financing with a Bad Credit Score

You’ve may have been through some difficult financial issues in the past, and they’re now recorded in your credit report. However, that may not stop you from getting car finance. Whilst your credit score can affect your application and the rate that you're offered, it’s not the only thing that the car finance company evaluates. 

Also, your credit score is not fixed forever. It can change, and you can definitely do things to improve it over time. Start by checking your credit report. It’s possible that there are errors there that are dragging your credit rating down. You can have that corrected, if something is not right. It will also help your credit score if you make sure to pay your bills on time every time. The sooner you start doing this, the sooner you’ll see your credit score improve. 

When it comes to getting a better credit score, know that it’s going to take some time. But it’s going to be worth it because you’ll have the chance to get finance deals with better interest rates. It means that you could be paying less on interest when you finally get car finance, or any other finance you may need. However if you don’t want to wait, some car finance companies do grant financing even to applicants with a bad credit rating. Be sure to choose the best lender that can offer you a good deal, which might mean shopping around a bit before you decide. 

Car Finance is Only for Brand New Cars

Many car buyers actually prefer second-hand vehicles to new cars. Used cars can be much more affordable. If you pick the right one in great condition, then you'll enjoy it as much as getting a brand new vehicle. Maybe you’re hesitant to buy a second-hand car because you think car financing is only available to brand new cars. This is another common misconception. 

Car finance companies can help you buy almost any car you want, whether new or used. There are just a few additional steps to make if you’re going to buy a used car. For example, you should try to do your own checks on the papers and documents, the car’s performance and condition, history, etc. You may need to hire a mechanic to help you assess the vehicle before buying it. Other than that, you can absolutely get car finance for a used car. We'd highly recommend you run an HPI check on any car you want to buy - whether with finance or not! An HPI check helps to see if the vehicle is stolen, has outstanding finance or other issues that you will wish you'd know about!

The Car is Yours Outright and You Can Modify It

When you get car finance, you get to buy the car you want, use it, and enjoy it. Nonetheless, it is still not fully yours until you make all the payments to the car finance company. While you’re still paying for the car every month and are the registered keeper, the lender actually owns it. There are very few modifications you can do. To be safe, don’t change anything until you have all the papers that show you’re the owner. 

But once you’ve paid the last payment and received the documents, then you can modify the car to your heart’s content. You can upgrade certain parts, apply new paint, put in new accessories, and so on. You now have all the freedom to make the car truly your own. 

Takeaway

As you can see, car finance doesn't have to be daunting. If there’s anything you find confusing, don’t hesitate to ask us at Carmoola! We’d be happy to help you. Also, check out our other informative articles on the blog. We’re here to make car finance more accessible to everyone so that you can start enjoying the experience of driving your own car. 

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