Warning: Don’t Buy A Car On Finance Until You Read This First!

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There are plenty of ways to buy a car these days, but, by far, one of the most popular ways to do so is by financing it. The way that it works is simple. You agree to pay a deposit (often a percentage of the car’s value) followed by a fixed number of monthly repayments. At the end of the term, you own the car outright.

It’s a convenient way of getting behind the wheel of any vehicle, as it means that you don’t have to spend ages saving up the cash to do so. But one fact about car financing some people don’t know is that not everyone will get approved for it.

Part of the car finance application process involves doing credit and affordability checks. For many people, in particular, the self-employed, this hurdle can be one that is often too hard to overcome.

Credit

Before you go and apply for finance on your next car, it’s crucial that you give yourself the best chance of getting accepted for it. Keep reading to learn how you can do that:

Get a copy of your credit file

The first thing you need to do is check that your credit file is healthy. In other words, there aren’t any anomalies or mistakes that could affect your chances. When people get declined for car finance, they are always advised to check their credit files. That is something you should do BEFORE the application process, not after!

Companies like Equifax can let you check your credit file. If you spot any mistakes, you will usually need to contact the creditor and have them fix it for you. The credit reference agencies you use can help you to do that.

Pay off any large debts

As I mentioned earlier, one of the things that get looked at during the application process is affordability. Put simply, finance companies have a legal duty to ensure you don’t take on more debt than you can handle.

If you’ve got little spare cash each month, it’s important you clear your debts first before getting any new ones. I recommend starting with the ones that cost you the most each month, like large loans or credit cards.

Use a reputable dealership

For the most part, we arrange finance on the cars we want by going through a dealership. It’s probably something you will do as well. The last thing you want to do is buy a car from a questionable dealer, so you need to choose a reputable one.

Motorists often buy with confidence at Carbase and similar large dealerships, so it’s worth sticking to dealers like that if possible. Irrespective of where you buy from, make sure you check for feedback and reviews from past customers.

Save a large deposit

Last, but not least, you should always try to save as much money as possible for your next car. Remember that the higher your deposit, the lower your monthly payments will be.

If you can’t save lots of cash each month, consider selling anything of value that you don’t need anymore. Examples include smartphones, games consoles, and other electronics.

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