Looking 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, witha 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.* Continue reading →
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.
I’ve had a car on finance, but it’s not really suitable for my daily use. Will voluntarily terminating my car finance agreement affect my credit score and could it prevent me from getting another car on finance?
Nicola, Port Glasgow
Ending a car finance agreement early using ‘voluntary termination’ is your legal right, as long as you’ve paid at least half of the total amount due and you hand the car back in satisfactory condition. You should then be left owing nothing and the lender should update your credit report to reflect this. The lender may also add a voluntary termination marker to the entry on your credit report which explains to other lenders why the finance was settled early. Your credit score should not be affected, as long as you have paid all of your monthly payments on time up to the point you hand the keys back, so you should not see any late payments registered. Lastly, unless any lender you approach has a policy of not lending to people who’ve opted for a voluntary termination in the past – and I’ve not seen any evidence of this – then it should not affect your chances of securing credit in the future. (January 2016)
You can find archived Ask James questions arranged under subject headings such as ‘applying for credit’, ‘credit and debt’ and ‘fraud’ at the main Ask James page.
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 and was hardly the most prestigious car on the road.
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.*
Older people – those who may have started with a relative old banger – are more likely to use cash or savings – up to 70% amongst those aged 61 and over. Meanwhile younger drivers appear to be taking advantage of affordable credit deals to skip a step, and move straight up to newer, more desirable models. Continue reading →
A soft credit check, or soft credit search, is an inquiry that occurs when a person or company checks your credit report as a background check. Instead, it looks at key pieces of information to check an individual’s credit worthiness, so that lenders can assess whether the individual will be successful in applying before carrying out the full examination of a credit report.
When a lender searches your credit report, they’re looking to see how you manage your credit now, and how you’ve managed it in the past. This search is then recorded on your credit report for future lenders to see. This is useful to lenders because if you’ve made a lot of applications for credit recently, it could suggest to them that you have an urgent need for credit which you may struggle to pay back. Continue reading →
Guest post from Danielle Mannus, Social Media Manager at Zuto
With car finance, a good credit rating can make the difference
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.