Not many of us can afford to buy a new car outright. Between April and June 2012, £2.2 billion was lent to buyers in order to fund the purchase of more than 155,000 new cars, with a further 200,000 used cars also being purchased on credit. A reputable car finance company can help you spread the cost of a new or used car over a period of time, allowing you to afford a better car than if you were paying outright.
There are companies that specialise in finding credit for people with poor credit history and many people will be able to successfully apply for car finance even if they are unable to secure other lines of credit such as a personal loan. There are a number of things that will be required when you apply for car finance.
These typically include…
Most car finance schemes will require some sort of deposit, although deposit-free plans may sometimes be available. The amount required for a deposit can vary depending on the lender, the scheme and the price of the car you are buying. The higher deposit you pay, the less your monthly repayments will be. If you already own a car you may be able to use it in part exchange to cover some or all of the deposit.
You will need a UK bank account in order to buy a car through car finance. You will typically be asked to set up a Direct Debit to make your monthly repayments.
Most car finance providers require you to hold a full UK driving licence. Some will, however, accept a provisional driving licence (typically charging a higher APR) or international driving licences in conjunction with relevant identification.
Personal and financial information:
When you apply for car finance you will be asked to provide various pieces of information and documentary evidence and identification. These will typically include your name, your address and previous addresses if you have recently moved, bank details and income. You may be asked to provide bank statements, wage slips, utility bills and photo ID.
Do I need to know which car I want to buy?
You do not generally need to know which car you want to buy. Some people choose a car and then attempt to get finance for it but it can make more sense to apply for finance first and then go shopping for your perfect car. Most car finance companies will offer deals that can be used across different dealers nationwide. Knowing that you have the finances in place when you find a car can save on disappointment later. Knowing what you can afford to repay or the maximum amount you can borrow can also save you from wasting time looking at cars that are outside your price range.