Credit Application: Car Finance Jargon Busters

Whether you’re applying for car finance for the first time or even you’ve already done this before, it’s important to make sure that you’re doing everything right so you’ll have the best chance of getting approved by the car finance company. Doing all the necessary preparations for your credit application – from improving your credit score to finding the most suitable car finance company – will help you get the best deal. Let’s take a look at what steps you can take to prepare your application for car finance with this car finance jargon busters guide. 

Check Your Credit Score First

Applying for car finance is exciting. Your hopes are high and you’re already imagining what it’s like to drive that new car home. However, if you’re not careful with your credit application, you might end up getting disappointed by a rejection from the lender. The first thing you need to do is to check your credit score to know whether it’s really good or if it needs to be improved. 

Having a high credit score can help you get better deals and lower interest rates. Car finance companies check your credit score to determine whether you are a low-risk or high-risk borrower. Having a high credit rating means your credit history is also good, and you’ve been committed to paying off previous bills, debts, and loans. Of course, lenders will use this information to assess the car finance deal they’ll offer you. 

You can check your credit score online through the websites of credit reference agencies like Experian, TransUnion, and Equifax. The way they calculate scores might slightly vary and it’s possible to have different scores from these agencies. You may check with the car finance company which credit reference agency they’re using so you’ll know the score they’ll be assessing in your credit application. 

Know Which Type of Car Finance You Need

Before you apply for car finance, you also need to know which type of car finance product you want. For example, if you’re sure you want to own the car, then you can consider getting a hire purchase deal. If you only need a car for a couple of years, you may want to get a car lease or a personal contract purchase agreement where you’ll have the option to buy the vehicle when your contract ends. 

Learn as much as you can about these car finance products while also evaluating your own needs so that you’ll know which one will be most suitable for you. Remember that financing a car is a big financial commitment so see to it that you’ve done your homework and are sure about the type of car finance you’ll apply for. 

Of course, it’s also crucial to know which deal is best for your financial situation. For example, monthly payments for a hire purchase deal are higher than that of a car lease or a PCP agreement but when your contract ends, you become the owner of the vehicle. With a car lease, the car will never be yours and you have to return it. With PCP, you have the option to buy the car by paying a balloon payment or hand back the car and not pay anything else. 

Be Honest in Your Credit Application

Once you know your credit score and the type of car finance you need, it’s time to prepare your credit application. For every car finance company, the application process can be different. You can find out how it all works with Carmoola here. However, what’s most important to remember is you have to be honest when it comes to the information you provide the lenders. 

Car finance companies will check your details thoroughly and they’ll find out whether you’ve made false claims to make your credit application look better. Some borrowers might lie about their employment status, income, or financial situation. This is a dangerous move and could cause the credit applicant to be blacklisted. When this happens, they won’t be able to apply for credit for some years. 

If you find that your credit score is not good enough, it’s best to defer your credit application and work on improving your score first. Bear in mind that for every car finance application, the lender will conduct a hard search on your credit report. This knocks off a few points from your credit score, pulling it down all the more. Improve your score first and be patient. It’s worth it, especially because higher scores can open doors to better deals. 

Get in Touch with the Car Finance Company

Once you’ve shortlisted the best car finance companies for you, see to it that you read as much as you can about what they’re offering. You can find plenty of information on their websites through the Frequently Asked Questions or FAQs page. Doing so will help you prepare your credit application. 

If there are things you don’t understand, then feel free to get in touch with the car finance company. Lenders are more than happy to help you in your credit application process. If you find things that are not very clear, be sure to ask questions. If you want to examine every detail of their car finance products so you can arrive at a sound decision, do so. The more informed you are, the better it would be for you as a car finance applicant. 

Carmoola Makes Car Finance Easy

When you think of a car finance credit application, you might imagine filling out pages and pages of documents. This might have been the case before but Carmoola is changing the way car finance is done. Now, with only your smartphone, you can apply for car finance by downloading Carmoola. After providing your personal details and verifying your identity through the app, you’ll know the result almost instantly!

Check out what Carmoola offers and how it works! Got any questions for us? Reach out and we’ll be glad to help you learn more about Carmoola and how you can get that dream car fast and without the hassle and complexities of traditional car financing.