Are you eligible for car finance? The funding method is becoming one of the most popular ways to purchase a car. The ability to spread the cost over manageable monthly payments combined with increasingly competitive rates of APR is very appealing. But many people are put off applying for car finance out of fear of being rejected. There are also concerns when signing up to a deal that can last up to five years. Thankfully, there is more protection than ever for consumers choosing car finance to fund their new car. In this edition of Creditplus Answers, we explain more about what makes you eligible for car finance and how you are protected.
Whether or not you are eligible for car finance depends on a number of different factors. The good news is that having a poor or bad credit rating is no longer something that can prevent you from obtaining a finance deal. There are a number of specialist lenders who work with “non-prime” customers, what the industry calls those with poor or bad credit ratings. Find out more about bad credit car finance.
The first key factor that comes into play when examining eligiblity for car finance is Traceability. When a finance provider analyses your application, they will want to be able to see a record of where you have been living for the past few years. Here at Creditplus, we need your last three years of address history. Other finance providers may differ.
Top tip: Signing up for the electoral roll is a quick and easy way to improve your traceability. If you are unsure if you are on the electoral roll, contact your local Electoral Registration Office.
The second key factor is Proof of Income. To be eligible for car finance, you will need to be able to prove the amount of money you have coming in each month. This tells the finance provider if you can afford the monthly payments. As part of FCA regulations, it is vital that car finance providers ensure that their customers can afford the finance package they sign up for. You will need to provide either a payslip or bank statement showing your monthly income.
Find out more about how the FCA protect consumers.
You can still be eligible for car finance if you are on benefits. However, you will need to show that at least half of your income comes from a form of employment. For a full list of the benefits eligible for car finance, visit our help and adivce section on the topic.
Another important factor is Age. If you are aged 18 to 21, it will be more difficult to prove you are eligible for car finance. Why? As a young person, you will have not had much experience with other forms of finance, meaning that your credit file will be labelled “thin” (see below section for more details). You may need a guarantor to help you secure finance, even if you have a healthy level of income.
There is normally also a maximum age limit. At Creditplus, this is set at 75. This is because many of the lenders on our panel see providing car finance to a customer this age as being a risk.
Your Credit File can also be a key factor in whether or not you are eligible for car finance. A credit file with lots of missed payments, bankruptcies and CCJs is a big warning sign to lenders. It can take five years for these to disappear from your file. If you have taken steps to repair your credit history, then you may still be eligible for car finance. For information on steps you can take to repair your file, visit our credit clinic for advice and resources that can help.
Another way your credit file can affect your eligibility for car finance is if it is relatively “thin”. What is meant by this? Well, car finance providers like to see a history of payments being made on time, with no delays or issues. If you have never applied for a form of finance before, this can reduce the amount of information available to the finance company on your credit file. Whilst you are still likely to qualify, they may require more information than usual to approve your application.
Car finance providers are primarily interested in finding out as much as possible from you before approving your car finance application. The more information you can provide, the better chances there are of you being eligible for car finance. Remember, qualifying for car finance does not mean you will get the best deal. To do that, you will want to use a car finance broker that can compare a variety of packages for you so that you can find the best deal. Find out how Creditplus compare car finance deals.
If you are considering car finance, then Creditplus is the service you’be been looking for. Simply complete our 2 minute online car finance application form and you will receive a decision on your car finance options. If any additional information is required, one of our customer advisors will soon be in touch to talk you through the process.
Car finance with Creditplus is a simple and straightforward process. So if you’re ready to buy your new car, what are you waiting for?
Car Finance Calculator – Work out what your monthly payments could be with our easy to use tool.
Loan Affordability Calculator – Get an estimate of how much you can afford to spend on Creditplus each month.
Help & Advice Centre – Find answers to all your car finance questions in the comprehensive help section of our website.