Guest post from Danielle Mannus, Social Media Manager at Zuto
Buying a car is one of the biggest purchasing decisions most people make and, with 75% of new car purchases involving finance, getting the best car finance deal available is really important.
As with most types of borrowing, car finance lenders review applicants’ financial records with credit reference agencies when deciding whether to offer finance, how much to lend and what interest rates to charge. This means that viewing your credit report before applying for car finance, and making any changes that you can to improve your creditworthiness, will help you to get the best car finance deal available.
Check your credit report for any out-of-date or inaccurate information. Start by ensuring all your active accounts show at your current address.
Also make sure that you are registered for the electoral roll at your current address. This will help to provide proof of address to car finance lenders.
If you believe that any information on your credit report is incorrect then raise a dispute with the creditor and notify the credit reference agency.
Take some time to review the summary of positive and negative factors listed in your report. Plan to resolve or improve any negative factors, where you can, before you apply for car finance.
What type of finance?
Your credit report can also help you to decide what type of finance you should apply for to get the best deal.
Personal loans are not secured against the vehicle, which means they’re good for people who want to own their vehicle from the point-of-sale. They are also often the cheapest way to finance a car. The increased risk of this type of finance, as perceived by the lenders, means that they usually require for applicants to have good or excellent credit reports.
Personal Contract Purchase (PCP) loans are secured against the vehicle and are a preference for many car buyers because they can offer the lowest monthly repayments and the option to return the vehicle at the end of the agreement. Most PCP lenders also require good or excellent credit reports.
Hire Purchase (HP) and Conditional Sale (CS) loans are secured against the vehicle and preferred by people who want to spread the cost of the loan evenly over the length of the agreement. Both types of finance are also available to people from most credit circumstances.
For more about how to get the best car finance deals go here.