Buying a new car? 5 key finance tips

Girl in new carLooking for a new car? Whether you’ve gone for a brand new model or a second-hand purchase, you may need to pay for it in stages with a loan or hire purchase. 

With these types of finance, a good credit rating can be the difference between getting a good interest rate or not, or sometimes getting any deal at all.

How much did you spend on your first car?

Many of us will have handed over a few hundred pounds at most just to get our young hands on a car of our own, even if it had seen better days.  Well, things have changed these days, with a generation gap when it comes to car-buying habits.  One in five 18-24 year olds, rather than buying a used and fairly old car, now chooses to lease their car. This is more than double any other age group, with just 5% of 41-45 year olds, and 6% of 46-50 year olds choosing this type of credit.*

Key tips for buying a new car:

  1. Do your research: Use calculators and comparison websites to understand the different options available, find out where the best deals are and what type of arrangement will suit your circumstances.
  2. Check your credit report: As soon as you make the decision to buy, check your credit report with all three credit reference agencies. Ensure everything is accurate and up to date and reflects your current circumstances, including the exact way your address and other personal details appear on your credit report.
  3. What kind of finance:There are several ways to finance your car deal – from a personal loan to a 0& purchase credit card, from hire purchase to a PCP loan. (more about each of those here) 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!  
  4. Room for improvement: If your credit report has areas for improvement, make a plan to get it into shape well before making your loan application. There are a number of steps you could take, including: ensuring you’re registered on the Electoral Roll; paying off more than the minimum repayments on your accounts each month and making sure never to miss a repayment.
  5. Don’t overlook the details: Buying a car on credit is an investment that costs more than just a deposit and monthly repayments. Before you sign on the dotted line, make sure you’ve considered the additional costs and that you can afford to repay everything you’ll owe when you make the purchase. Additional costs might include insurance, fuel, maintenance and road tax. Meeting your monthly repayments on time should help keep you on the road to a strong credit rating, too.

*Research was carried out online by Canadean in October 2015 among a sample of 1,000 UK adults.

21 thoughts on “Buying a new car? 5 key finance tips

    1. CreditExpert Neil

      Hi Ismael,

      Thanks for contacting us. When you make an application for credit lenders will look at both the information on your application and on your credit report to make their decision. We won’t know the exact reason why they will decline an application if they have done so. Getting a copy of your report though can help, as you can see if any negative information has been recorded.

      To find out more about why a lender may decline take a look at our video here, and more about getting your report here.

      Kind regards
      CreditExpert Neil

    1. CreditExpert Neil

      Hi Sharon, thanks for your question.

      To cancel your membership, please call us on 0800 561 0083 or 0344 481 0800.

      Our opening hours are Monday to Friday 8am to 7pm and Saturday 8am to 4pm .

      Calls to 0800 and 0808 free phone numbers are free from residential lines and consumer mobile phones. Charges for calling 03 numbers are the same as for calls made to standard UK landline phone numbers starting 01 or 02. If your landline or mobile phone package means you can call an 01 or 02 number as part of ‘free’ inclusive minutes, the same will apply to calling our 03 numbers. Calls may be recorded for training and monitoring purposes.
      If you require any further assistance, please do not hesitate to contact us.

      Full cancellation details can be found here.

      We look forward to hearing from you.
      Kind Regards
      CreditExpert Neil

  1. Mena Cunningham

    I’ve recently looked into getting a car on finance but was declined for unknown reasons. Apparently it may have something to do with a previous address where my parents had poor credit but I lived with them. It could also be that I cannot enroll on the electoral register, but I’m American so that’s never going to change. Please help me increase my score from 665.. I don’t know if there’s anything I can do

    1. CreditExpert Neil

      Hi Mena, when a credit check is done it is always by name rather than just at an address. As a result information in your parents name would only affect you if you have a financial connection to them, such as a joint account. Otherwise lenders would only see information in your name when they perform their credit check.
      Lenders do often use the electoral roll to confirm that an applicant is genuine, so may decline if they can’t see your details recorded. What you can do is to add a notice of correction to your report to explain that you are not able to vote. Lenders can then take this into account when considering you for credit. You can find out more about adding a notice or correction here. You will need to have obtained a copy of your report before you can add a notice of correction. Getting your report will also let you see if you are financially connected to your parents. Find out more about how to apply here.
      Kind regards
      CreditExpert Neil

  2. Paul

    Experient don’t help anybody all they do is hold information about your personal business and share it with every Tom Dick and Harry that wants to know for a small fee and then charge you £14.99 per month for the privilege they cannot change for help with your credit rating whatsoever any bad credit you have on your credit file is seen by everyone if you don’t have bad credit you can get online do you have good credit you can get alone simple it makes no difference whatsoever what is on your credit for battle it’s on their because it has to be on there and anyone can look at it so if you’re trying to get a loan for 10,000 and you already had 10,000 that you didn’t pay back guess what you won’t get another 10,000 so cancel your membership and don’t let experience rip you off there absolutely useless

    1. CreditExpert Stuart

      Hi Paul, I’m sorry if you feel this way. We are willing to help out customers out with any queries they may have regarding their Experian Credit Report, even if they are not a member of CreditExpert. If you have any issues with your report, we would be happy to help you. You can find our contact details here. If you are also looking to find out about the role of credit reference agencies, you might want to check out this link.
      Thanks, Stuart

    2. MarieClaire

      Hi Paul
      Sorry but I have to disagree with you
      When I was trying to improve my credit rating for a
      I found Experian extremely helpful
      I phoned them loads raised lots issues they were great
      really friendly offered lots of advice

  3. Richard

    Another top tip:
    Many car dealers offer incentives to buy a new car using their finance packages, maybe £1000 off the price or free servicing as an example.

    Buy a car on this deal then use a 0% credit card to pay off the finance within 14 days and you’ll have maximised the savings.


    My name is owais shah
    Actually i want to apply for a finance car but my credit score is fair ….. and i don’t want to be decline…
    What should I do…?

    1. CreditExpert Neil

      Hi Owais, it will always be up to the lender as to what decision you make but there are actions that you can take to help improve your credit report. If you are not on the electoral roll then it is always worth making sure that you are registered as lenders will often check this to help confirm your ID. For more tips on improving your report are available here. Kind regards Neil.

  5. Ian MilroyL

    The most cost-effective way to purchase anything is to save and pay in full. This leaves you with an asset all be it a depreciating one, with no liability to anyone. Ifk in the future you require, your asset can always be converted to a diminished amount of cash

  6. Ian

    I recently cancelled my monthly £14.99 CreditExpert subscription. This was due to the fact that I don’t think I got any value for money for the duration of my membership over the free membership that you provide or the service you get from Clear Score which is also free.
    My mortgage was due for renewal and rather than just letting it roll over onto a higher rate, we switched lenders to a better rate and a shorter term, win win…. However, my credit score has dropped because I’ve started a new account which is not 6 months old. The fact that I never defaulted before on a higher monthly payment seems not to have been taken into account. Surely if you are pro active in managing your finances you shouldn’t be penalised but rewarded.
    It appears to me that the individual has no control over the ‘score’ given to them and how you get to a particular ‘score’.

  7. Lily Pritchard

    I spent 1500 pounds for my first car. I was very young and I didn’t know almost anything about life. Now I found really helpful your tips. Thanks


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