Are you considering applying for car finance? If this is your first time, you may be confused by the process.
Here are 10 myths that you need to be aware of.
1. You Need a Good Credit Record
It always helps to have a good credit record when you apply for any type of loan, but it is not always necessary.
There are many lenders who will still provide you with car finance even if you have a bad credit record, and they will often use other factors to decide whether to approve your application.
2. You Can Only Get Finance from the Dealer
You can get car finance from lots of places, including online lenders. Don’t assume that only the dealer can provide you with finance for your car.
3. Applying for Various Loans Hurts Your Credit Score
When you are shopping for car finance, this can lead to multiple credit score checks. This would normally have a negative impact on your score.
However, when it comes to car finance, where multiple checks are made in a short period of time, such as over a period of 14 days, these are usually counted as one check, so the impact on your score is reduced.
4. You Cannot Get Finance If You Have a CCJ
If you have a County Court Judgement (CCJ), this can affect your chances of getting car finance. But it does not always stop you from getting finance, and there are many lenders that may still be happy to lend to you.
Representative APR of 27.9%
5. Getting Finance Takes a Long Time
Car finance used to take longer, but now it can be done very quickly, especially when you apply for it online.
6. You Need a Large Deposit
You do not always need a large deposit to get car finance. It may help sometimes if you do not have a great credit score, but it is not usually a necessity, and it depends on the requirements of the lender.
7. Having Car Finance Hurts Your Credit Score
If you take out car finance and don’t make your repayments on time, this can have an impact on your credit score. But as long as you make all your repayments, you can actually improve your credit score.
8. You Will Get Your Deposit Back
When you provide a deposit as part of your finance agreement, you will not usually get this back. Instead, it is a part payment that goes towards the cost of the car.
9. You Can’t Get Car Finance If You’re Self-Employed
If you are self-employed, you may worry that you will not be eligible for car finance. But there are lenders who may be happy to lend to you, and they will often look at other factors when making their decision.
10. You Can Get Guaranteed Car Finance
Some lenders may say they can provide guaranteed car finance. But the truth is, they cannot guarantee to provide you with finance until they have checked your situation. So don’t assume that you can always get guaranteed finance no matter what your circumstances.
Don’t Be Fooled By the Myths
These are 10 of the top myths surrounding car finance. If you are shopping for a new car and you want to apply for finance, keep these in mind because they may help you with your search.