Whether beginning your university life or initiating your small firm as a self-employed, a car may prove helpful in every condition. It is the reason many millennials and 18+ individuals seek car finance. Shockingly, most individuals search for “guaranteed car finance quotes”.
You may spot it when you google it online but it does not work as you expect. In fact, no loan provider can provide a car on finance without conducting basic affordability checks. If your existing financial potential does not allow you to finance a car, you don’t get approval.
Does it shatter one of your hopes associated with owning your car?
Relax. It is true that you cannot get car finance unless you can practically afford that. Some myths may help you break your idea about car finance. It is because qualifying for the same is not complicated either. This is why you need to know the facts before searching for affordable or car finance quotes with 100% approval.
The blog may help you update your knowledge and facts about “guaranteed car finance” and decide right for your finances and lifestyle.
What to know before applying for 100% car finance?
Now, you are familiar with the fact – that “guaranteed” car finance does not guarantee approval. You can only qualify if you meet the terms, eligibility and affordability criteria. It may differ from lender to lender. Here are other facts associated with guaranteed car finance:
1) Soft credit analysis does not guarantee approval
Lenders conduct initial credit checks to analyse the probability of qualifying and the approx. expenses that follow with car finance. It just does not confirm car finance approval. Post that, they conduct a detailed analysis of your finances-
- Checking expenses
- Employment history
- Credit score
- Analysing the debts and CCJs and bankruptcy issues
- Bill and rental payments
- Payment history – frequency of payments and missed ones
It helps them analyse whether you can provide a deposit and additional expenses to qualify for the loan. Moreover, it also reveals your potential to pay the repayments timely.
2) You must live atleast 3 years in the country
It is true that you may spot different criteria everywhere, but to claim car finance you need to live for at least 3 years in the country. It is because then you can apply for permanent residency. It will grant you the flexibility to ensure a permanent address as well.
It is one of the approval points to consider. Individuals living at the same address for years share more chances to qualify than an expat who just landed in the country.
3) Provide 10% of car value as a deposit
Around 80% of the car finance dealers and lenders ask for around 10% of the car price as a deposit. Moreover, you can increase the deposit to even 30% if you share the financial capacity.
It would help reduce the overall costs of the loan and make it affordable for you.
For example, if you want to own a car financed with a car price of £200000, you must pay £20000 upfront to get the loan approval. If you pay 30% like- £60000, you can reduce the overall liability over the finance agreement.
Paying more as a deposit is ideal for individuals seeking guaranteed car finance on bad credit. It amps up their chances to grab an affordable loan quote that would be otherwise impossible.
4) Must hold good income and stable credit
Most individuals seeking guaranteed car finance believe in getting it easily. However, it does not work like that. You must ensure the cash surplus and income affordability to qualify.
A credit score is also important from the approval context. If you lack one, you may not get the car finance. If you get one, the price stays competitive.
This is why individuals with no income, i.e., unemployed or seeking one, find it hard to qualify. They lack stable income and credit scores. In this case, you would need a guarantor to get the car financing. He acts as a security on the agreement and approves to manage payments on the borrower’s behalf.
The best part about this is – it lowers the overall loan costs and improves the chances of qualifying.
5) You cannot get car finance in bankruptcy
According to the government rules, no person can apply for car finance before 12 months of bankruptcy discharge. Moreover, while doing so, the individuals must prioritise lenders dealing with poor credit profiles. Otherwise, it may get challenging for one to qualify. This is because other car finance providers may discard the application simply because of the bankruptcy status. Your profile appears less reliable than others with stable finances and a good credit history.
To apply for car finance after bankruptcy, you must do the following:
- Check and update your bankruptcy information
- Improve your financials with a new income
- Update your address and electoral roll
- Make bills and debt payments on time
If you do so for at least 6-8 months before applying, you may get a guaranteed car financing quote with a bad credit score. Lenders may check the improved financials and take it as a good note. However, some may still provide car finance at competitive rates. This is because the credit status stays the same on the credit profile for at least 6-7 years. Identify your chances to get affordable quotes accordingly.
6) Car finance without zero checks-“DOESN’T EXIST”
“According to the Consumer Credit Act 2010, “no lender should make a misleading claim concerning consumer credit.” According to the act, no advertisement can contain or claim “loan guaranteed” without a detailed analysis of the borrower’s affordability and finances.
Thus, any lender or car finance dealer promoting 100% guaranteed car finance without standard guidelines breaches the FCA conduct. Eventually, invites a detailed investigation and enforcement action from the authority.
If you approach any such fraud dealers, analyse the terms and conditions mentioned in small letters. It would help you get an idea of whether you should partner with them or not.
7) Guaranteed finance application fee is high
Before considering guaranteed car finance, it’s crucial to assess your finances and capabilities. Despite having a good income, there is still a risk of non-repayment. As a result, the lender must provide affordable car finance. By accounting for the rise in car finance prices, individuals can make informed decisions and avoid unexpected situations. This is one of the most important aspects to analyse when applying for car finance.
Thus, guaranteed car finance is all about the affordability. If you meet the basic income and eligibility terms, you may get it. Otherwise, applying for 100% car finance approval may impact your credit score and finances later. The above-tips may help you decide right according to your financial capabilities.