Car Finance and Affordability – the Motorly Guide
Understanding what you can afford is an important step when applying for car finance, especially for those with a bad credit history.
If you have made an application for finance in the last couple of years, it’s likely that you’ve heard of affordability. It’s likely that you were asked a few questions about your affordability status or even went through an affordability check.
Affordability has become a buzzword in the car finance industry over the last few years, and it’s all a part of being a responsible lender. By getting a better understanding of your income and outgoings, lenders are able to get a better picture of what you really can afford to borrow.
How does affordability work?
When taking out car finance, lenders will look at your income and outgoings to see how much disposable income you have. Simply put, the more disposable income you have, the more likely that you’ll be able to afford your car finance payments.
What type of car can I afford?
Taking out a car finance loan to pay for your new car is a big financial commitment that will run for several years. So, the affordability checks done by lenders protect you from taking out finance you cannot afford. You don’t want the car repayments to push you into debt or make it harder for you to pay your bills. This is especially true for those with a bad credit history or who has struggled with their financial commitments in the past.
When considering how much you can afford to spend on a car, it’s important to consider all the extra costs and charges. It’s more than just the car payments. You have to factor in the insurance, fuel costs, road tax and the maintenance and upkeep of your vehicle. Depending on what car you choose, these costs can be higher than the monthly car payments.
At Motorly, we recommend that before deciding which car to buy, you set up a budget of what you can afford. All you need to do is to work out exactly how much your essential bills are per month. By doing so, you can work out what your disposable income is. Ideally, you want to have some flexibility in your budget to cover unexpected bills or a change in your personal circumstances. The more flexibility you have in your budget, the more likely it is that you will be approved.
By doing this before you start shopping for cars, you increase the chance that you will pass the affordability checks.
How Motorly can Help
If you are in the market for a new car, Motorly can assist you every step of the way. Our sales team have a wealth of experience and can help you to avoid any pitfalls and get behind the wheel of a new car.
Even if you have struggled to find the finance you need in the past, Motorly is the Bad Credit Car Finance specialist and can help you find a car finance solution that suits you. By working out your affordability first, you can make sure that you don’t fall in love with a car that is outside your budget.
Check out our handy Car Finance Calculator below to get an idea of what you can afford.