Car finance: how to get the deals you want

Making memoriesDid you know that new car registrations are on the up? They were higher than ever in 2016, with over 2.6 million cars registered throughout the year.

And from 1 March, all new cars for the next six months now have the new 17 number plate. However, the forecast is not all rosy. The chief executive of the SMMT (Society of Motor Manufacturers & Traders), Mike Hawes, said on 5 January that he thought this may have been a peak, and that 2017 would see a 5% decline due to the weak pound and the effects of Brexit.

Car finance is one of the most common examples of how we pay for ‘large ticket’ items, and a good credit rating can be the difference between getting a good interest rate or not, or sometimes getting any deal at all.

What are your car finance options?

If you decide to borrow credit to buy a car, the marketplace is vast, with plenty of rate and payment options. It’s worth comparing different loans and methods of finance so you get the one that’s best suited to your needs.

  • A personal (or unsecured) loan is usually at a fixed rate of interest over a fixed term – they typically tend to be up to £25,000 and last for up to 5 years. Find out more about personal loans
  • With hire purchase, you pay a deposit to the dealer to drive the car away, and pay the rest monthly with interest over a set period of time.
  • A PCP loan is usually a lower monthly payment over a fixed period of time, and at the end you have a number of options including buying it outright.
  • Some dealers also offer 0% purchase deals, and some people go through specialist brokers.
  • Paying it off in full with a long-term 0% purchase credit card could be another option, as many dealers now accept credit cards. For example, if you want more flexible monthly payments. If you do choose to use a card, then it’s important to pay the card’s minimum repayments. Just make sure you budget to pay off the balance within the life of the 0% deal if you can, to avoid paying unnecessary interest. Compare credit cards here We are a credit broker not a lender, working with selected lenders.†

Whatever you decide, just try to make sure that you can afford the monthly payments and that you would still be able to afford them, even if your circumstances change. There are different pros and cons to all of these, depending on your individual circumstances. Do your research – and always remember to check the small print for hidden catches!

How can I compare car finance, loans and credit cards?

Now Experian can help you find credit cards and personal loans you’re more likely to be accepted for, and it won’t negatively impact your credit rating. Find out more about car finance deals here

Experian CreditMatcher is a free independent service that helps you compare credit cards and personal loans you’re more likely to get, based on your credit information, and gives you your Experian Credit Score FREE forever.

Remember though that if you are accepted, the interest rate or promotional deal you get from lenders may be different to the one advertised.

Get your credit report in shape too

It’s a good idea to check your Experian Credit Report before you make the application. This allows you to see what the lender may use about you, and gives you the chance to correct any inaccuracies and update any out-of date information. The credit score the lender gives you helps them decide whether to accept you as a customer or not – usually, the higher your credit score, the better your chance of getting your loan.

The Experian Credit Score is free, forever. Checking your Experian Credit Score before you apply for new credit can give you an indication of how lenders may view you based on information in your Experian Credit Report.

†Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.

Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to.

Car finance: Your car may be required as security and you could lose your vehicle if you don’t keep up with repayments

CreditMatcher is provided by Experian Ltd (Registered number 653331). Experian Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 009743). Experian Ltd is registered in England and Wales with registered office at The Sir John Peace Building, Experian Way, NG2 Business Park, Nottingham, NG80 1ZZ.

Copyright © 2017, Experian Ltd. All rights reserved.

(updated Mar 2017 from original blog post Sep 2016)

24 thoughts on “Car finance: how to get the deals you want

  1. Charley Simpson

    For those who don’t use Experian, even on a trial basis, it is well worth it. We are a (very) small finance company and we have used Experian for years and it is by far and away, the most accurate credit search information you can find from any credit reference agency. Nice post Darren, cheers.

    Reply
    1. Tony

      I’ve a credit score of 973/1000, but I’ve heard that this does not matter when going for finance that much. Do u think I would have a good chance of getting finance with this score?

      Reply
      1. Neil Stone

        Hi Tony,

        Congratulations on having an excellent score! Your Experian score is calculated from the information on your report, and is a guide to how we believe lenders will rate your information. A score of 973 means that we believe that you are a very low credit risk.

        Lenders will all have their own method of scoring, and the decision to accept is always up to the lender. They will look at both the information on your report and your application form when considering you for credit, factors such as employment status and income can also play a part.

        We can’t say for certain that you will be accepted, but having a high Experian score means that the information on your report
        is positive and this will certainly help if you do decide to apply.

        Kind Regards
        Credit Expert Neil

        Reply
  2. Dan

    Hi

    My credit score has previously been rock bottom low I now however have built my score back up and am continuing to keep it as high as possible

    I’ve been told this doesn’t matter for things such as finance as my history will still effect me is this true?

    Reply
    1. Neil Stone

      Hi Dan, thanks for your question and congratulations on building your score back up.

      Your Experian score is provided as a guide to how we believe lenders will rate the information on your report.

      Having a good Experian score will generally mean that the information on your report is good.

      As negative information such as defaults or late payments get older they will have less of an impact on score, although it will remain up to individual lenders to whether they will accept an application or not.

      Negative information isn’t kept forever though, defaults for example come off your report automatically after six years.

      I hope you find this information useful.

      Kind Regards
      CreditExpert Neil

      Reply
  3. Sharon

    Hi my husbands score is slowly getting better what score do you need to be able to apply for car finance ? As we don’t want to risk it and he’s score goes down for applying

    Reply
    1. CreditExpert Neil

      Hi Sharon, it’s good to hear your husbands score is improving!
      Lenders will always make their own decision when you apply for credit, and they will all have their own criteria for the kind of customer that they are looking for. So we can’t say what score he would need before making an application.
      He may find our guide to getting car finance, including tips to make your report attractive lenders helpful, this is available here.
      Kind regards
      CreditExpert Neil

      Reply
  4. Jason

    Hi Darren,
    I’ve recently checked my experian credit score and it’s showing 999! Does this mean most lenders would lend me money!
    Many thanks
    Jason

    Reply
    1. CreditExpert Neil

      Hi Jason, congratulations on your 999 score! Having a high score will mean that there is a lot of positive information on your credit report. This will certainly help when you apply for credit. However lenders will also look at information on your application form, such as income and employment status, so having a good score does not guarantee that you will be accepted. It is however a great place to start from! Kind regards Neil

      Reply
  5. jay

    Hello, I have a credit score of 796. I want a car on finance but in January was declined by VW and ford. I have 2 defaults on my credit file from previous debts but they both read zero as I have paid the debts off. I believe the defaults come off in October 2017 as that will be 6 years from when they occurred.
    My question is is it possible to get finance on a car before then? The car I want works out around £280 a month, I can afford this 3 times over.

    Any info would be appreciated.

    Jay

    Reply
    1. CreditExpert Joe

      Hi Jay
      When you apply for credit, its only the lender that decides if to accept you or not. They will score you based on their own criteria, so what lenders are looking for on your report will vary. The Experian Credit Score is an indication of how we feel they may score you to give you guidance. This video explains further how lenders make decisions. Defaults are removed from the credit report 6 years after the date of default, we do feel they have less impact over time but some lenders will have a no default policy. Its always worth speaking to the lender before applying, explaining your current situation as they should be able to advise on if they think they’d accept you or not before applying.
      Regards Joe

      Reply
  6. stuart

    Hi ,
    new to Experian and have checked my score 965, I have recently paid off a mortgage and second mortgage but they both still show as outstanding balances on my file, so my lenders have not yet told agencies they are cleared. I am purchasing a new car in Dec but am scared to apply for the credit as these 2 items are still on my file and I feel could negatively impact me getting the credit I need as they imply I still owe this money. Should I apply as my score suggests I am good candidate or ask the garage to hold the sale until they are off. Some people say however paying off you mortgage also hurts your file so looks like I am getting penalised twice.

    Reply
    1. CreditExpert Neil

      Hi Stuart, thanks for your question.
      An Experian Credit Score of 965 is a good score and should mean that the information on your report is generally positive. When you make an application for credit lenders will look at the information on your report together with that on your application form and then use this to make their decision. If your old mortgage account has not yet been updated to show as cleared then the lender could think that you have much greater financial commitments than you actually do. Most lenders update their information on a monthly basis, so we would expect the old mortgage account to be updated shortly. If you contact us we can check when we are expecting the next update from the mortgage provider, so you will know if it is due before you make application for car finance.
      As your Experian Credit Score is calculated from all the information on your report any changes to the report can impact the score. If you had very few or no other active accounts when a mortgage account is paid off then it is possible that a score could drop, but if you do have other active accounts we would not expect a significant change. Kind regards Neil

      Reply
      1. stuart

        Thanks Neil,
        Shall wait until they show on file as paid hopefully early Dec. I had taken a small loan to pay off both the mortgage and 2nd mortgage so this is on file now as a recent credit application pushing up my unsecured loans and took a phone contract out for my child in July again another recent application . So I suppose it will be how the dealership looks upon this despite my disposable income now increasing by £ 650 a month.

        Reply
  7. Peter

    Hi,

    My report was very bad before on 444 but i have managed to clear my payments and it is now showing 894 out of 999 as at 27/12/2016

    Any chance of getting a fair deal on car finance?

    Reply
  8. Rob

    Hi

    My score is 761, and although i have no defaults, missed payments or ccjs, i do have quite a high balance on credit cards. What is the likelihood of being accepted for a car lease deal (instead of HP ).

    Thanks

    Reply
    1. CreditExpert Neil

      Hi Rob, it will always be up to the lender themselves as to whether they will be prepared to accept. Having no defaults, missed payments or CCJs will certainly help your application, and it will be likely to depend on whether the company you apply to believes that it will be affordable for you as to whether they will accept.
      Kind regards Neil.

      Reply
  9. Youssef

    Hi Neil,

    I’m 21 with bad credit of around the 590 mark at ththe moment which I have been building on for the past year from 440. I’m looking to get a car on finance but I am pretty certain I won’t be able to with such a poor credit score. My question is therefore at what point shall I start thinking about car finance (what score) with the main dealerships? e.g. Audi/BMW/VW

    I got in to some trouble with payday loans when I turned 18 and was a student and I had 2 defaults, will these show on my file for another 4 years?! I have paid them off and now have a good job that pays which I have been in for the past 2 years, how will this influence my credit score?

    Thanks!

    Youssef

    Reply
    1. CreditExpert Neil

      Hi Youssef, it’s always up to the lender themselves as to what they are prepared to accept, so sadly there is no specific number that you would have to get to ensure that you are accepted, but we would consider a score of 721-880 as fair. A defaulted account will stay on your report for 6 years from the date of the default and then come off automatically. As the defaults get older they will have less of an impact on your Experian Credit Score. You may also find these tips on improving your score useful. Kind regards Neil.

      Reply
  10. Shab

    Hi I was wondering, I have a credit score of 460/1000 and I’m 20 years old is it possible for me to get a car which costs £4000 on finance? Will I be refused for finance?

    Reply
    1. CreditExpert Neil

      Hi Shab, it is always up to the lender themselves as to what they are prepared to accept on a credit report. They will also be looking at other information not on your report such as employment status and income. If you are looking to improve your Experian Credit Score though here are some of our tips. Kind regards Neil

      Reply
  11. David Bullock

    Hi I have a credit score on experian of 706. I am looking to get a car on finance in 2 years time. How likely would this be?

    Reply
    1. CreditExpert Neil

      Hi David, sadly we can’t say for certain if you would be able to get finance in 2 years time as it will always be up to the lender what decision they make.
      However 2 years does give you time to start to improve your credit report. For tips on how to do this here. Kind regards Neil.

      Reply

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