How to get a vehicle on finance

If you’ve never taken out finance before, you may be wondering how to get a vehicle on finance. Car or van financing is one of the most popular ways to purchase your next vehicle. Vehicle financing is a great way to help ease the financial burden of owning a car or van. It allows you to spread the cost of your chosen vehicle into affordable monthly repayments with added interest. If you’ve not had car or van finance in the past, you may be wondering what the best way is to get accepted. The guide below explains the different types of finance agreement available and how to increase your chances of getting approved.

Compare finance agreements

In the UK, there are 3 main types of car finance agreements which tend to be the most popular amongst drivers. They are hire purchase, personal contract purchase (PCP) and a personal loan option. Each agreement can be used on both cars and vans and can be taken over a number of years. Depending on your credit score, budget and what you want from your car finance, you may be suited to one more than other. For example, if you want to own the car outright and have a good credit score, a personal loan may be the best option for you. Or, hire purchase can be better if you are looking for bad credit van finance and want to own the vehicle at the end of the agreement.

Improve your credit score

Your credit score can be important to car finance agreements as it helps lenders to predict what type of borrower you will be. Finance lenders reserve the best deals for those with better credit scores as they are seen as less of a risk. From a lenders point of view, they need to know whether you can be trusted to pay back your loan or not. Having a low credit score usually indicates that you haven’t had trouble meeting repayments in the past, have a default on your credit file, have been issued a CCJ or have been declared bankrupt. If you’re credit score is a little on the low side, you could consider increasing your credit score in the run up to your car finance application to help get a better deal.

Prove your affordability

Finance lenders will also want to know how you plan on paying your vehicle finance back. They can do this by performing an affordability check on you before they decide to offer you finance or not. An affordability check is where lenders make sure you aren’t lending more than you can afford to pay back. They can do this by requesting bank statements to see how much you have coming into your bank and how much your outgoings are. Employment status can vary from person to person and can affect your finance approvals but there can also be options available for self-employed workers, part-time employed and benefit car finance deals too.

Save up for a deposit

Some finance deals require you to have a deposit to put down to help secure the deal. It is possible to get car finance deals with no deposit but having a deposit can work in your favour. Putting more in for your finance deals means you don’t have to borrow as much from the lender and means you take out a smaller loan. A smaller loan can help to reduce your monthly repayments and make your finance deal more affordable.

Dealer vs broker financing

Whilst sorting your vehicle finance at a dealer can be convenient, you could save money by using a vehicle finance broker. Many people think the only way to get finance is at the dealership, but brokers can be just as easy and convenient to you. Brokers can also have more lenders than available at the car dealership. You can then use your loan provided by a lender to get the car you want from any dealership. So, if you’ve found the car you want, it can be worth checking rates offered by brokers first too.