So you've decided to get a loan for your next car, but you're feeling a bit worried about it all 😟 As long as you've done your research and you understand the commitment, there’s absolutely nothing to worry about 😀 The best step you can take before you start your application is to learn as much as you can about car loans. You should also take time to compare offers from different financial institutions like banks and car finance companies. You want to get the best deal!
As with anything, the more you prepare, the better the outcome will be. This includes checking your credit history, credit score, and the documents you will submit for your car loan application. Make sure that all details are correct so that the process goes smoothly. If you see any errors, make sure you take care of them first, before submitting your application.
Still worried about getting a car loan? Here are some of the reasons why you don't need to.
It’s Simple to Apply for Car Loan Finance
There are many financial institutions in the UK that offer car loan deals that you can choose from. It’s now so easy to look for the best car finance company or bank near you. A simple Google search would show you thousands of results for car loans UK. You can even narrow it down by searching for “car loans near me.” This is a simple step that you can do with your phone or computer.
When it comes to comparing car loan deals, you won’t have any trouble doing that. You can ask for a referral from your family or friends, if any of them already has a car loan. Most of the time, a recommendation from someone you trust can lead you to a good car finance company. You can also do an online search for customer reviews on different financial institutions where you can read about experiences and what people think of a particular lender.
As for the actual application for car loans, most lenders offer online applications. This means you no longer have to go to their offices or spend time on the phone talking to their representative. You simply have to submit your requirements online through the car finance company’s website or app. They will then process your application online. It’s really very convenient to get a car loan nowadays because you can apply for a car loan 24/7, which means you can take your time and not feel any pressure from a sales person.
Can You Get Car Loans with a Bad Credit Score?
Worried that you can’t get a car loan because of a bad credit score? There are a number of steps you can take if you're in this situation. If you have a bad credit score, the first step is to improve it. This is going to take some time because you have to work on paying your bills on time and set a good record in your credit history.
If you don’t mind waiting before you buy a car, then you can definitely work on improving your credit score, as it does take some time to start seeing changes. Start by being more organised with your payments so you won’t forget them when they’re due. Also, check your credit profile thoroughly, because there might be some errors that are causing a low credit rating. And discrepancies in details can cause an issue with your score.
Another step you can take is to get a guarantor when you apply for a car loan. The guarantor should have an excellent credit score because the lender will assess it. The person you choose to be your guarantor will have the financial responsibility of paying your car loan in the event that you won’t be able to make them. Just make sure first that the guarantor understands this responsibility.
Usually, having a guarantor for your car loan application gives you a better chance of getting approved by the lender, although this option is not always offered by every lender. Car finance companies may be more confident to offer you a car loan knowing that there’s someone of good financial standing to back you up in case you experience any financial setbacks. So, if you are not confident with your credit score, try to get a guarantor for your car loan application.
If your credit score is just a bit low, you might still be able to secure a loan, but be aware you might have to pay a higher rate of interest.
Use a Car Loans Calculator for Estimates
Some car buyers worry about getting a car loan because they don’t know how much they have to set aside for the monthly repayments, or how much they can afford to borrow. While manually calculating the repayment amount is not that complicated, but it will still take some time. You can use a car loans calculator for this and see the results instantly.
With a car loans calculator, you can adjust the different values so you can arrive at an amount that suits your budget. For example, you can change the length of the car loan term. If you can afford a bigger monthly repayment, then you can shorten the term, or lengthen it if you want a more affordable repayment amount. You will also see the interest rate of the car finance company in the computation.
However, you may need to work out how much you can afford to spend each month. Try to look at your last couple of months of bank statements, how much money do you have coming in each month? How much are you spending each month? If you calculate what's left over, this could help you see what disposable income you have, and you can decide an appropriate proportion that you'd feel comfortable spending on your car. Don't forget, if you're buying a car on finance, you'll still need to account for other car costs such as road tax, insurance, repairs and maintenance and of course fuel.
The car loans calculator is a useful way to get an idea of the amount you need every month to repay the lender. While the final amount may change after the lender has assessed your application and you’ve been granted a car loan, it will start to give you an idea. It’s a good idea to play around with the calculator and look at different interest rates too.
Now that you’ve learned a bit more about car loans, hopefully you understand a bit more and feel less worried! Take time to read more about the topic if there are things you’re not sure about. Also, don’t hesitate to contact the car finance company directly if you want to know more about their car loan deals. They will be happy to help you out. Ask all the questions you have for them. It will make it easier for you to compare different deals and offers and even types of finance deals available.
Buying a car these days is so simple and convenient, especially with the likes of online car marketplaces, where you can order a car from your sofa! But before you get carried away, make sure you understand the risks and benefits of car finance, make sure you can afford the repayments, and are comfortable with the terms 😊