Getting a Car Loan – The Motorly Guide

How to prepare for a car loan and improve the chances of getting your new car

Looking to buy a new car? If you are considering a car loan to finance your new car you may be unsure of what you can do before you apply to improve your chances of getting accepted.

Here are our top tips to help you get the car loan you need to finance your next vehicle. 

Save for a deposit 

Although No Deposit options are available, the bigger deposit you have the less you’ll have to borrow. 

By having a bigger deposit you make by able to decrease the size of the car loans needed to finance your vehicle. It could reduce the monthly payments, or you could borrow the money over a shorter loan term. 

By borrowing less, you will also increase the chance of you getting approved. This is because the more you borrow, the higher the perceived risk you are to the lender.

Keep an eye on your credit report

When applying for a car loan, it’s worth knowing exactly what your credit score is. Your credit score is taken into account when taking out car finance. Therefore it’s vital to know where you stand with yours. That way, you will be able to make an informed decision on what to do next.

Once you know what your credit score is you can take steps to improve

How to improve your credit score

If your credit score is lower than you hoped it would be don’t panic! The good news is once you know what your credit score is you can take steps to improve it. A few small changes to your credit profile can have a dramatic on your score, and in turn, your chances of getting approved for a car loan. 

Steps you can take to enhance your credit score include:

  • Register for the electoral roll
  • Ensure all bills are paid on time
  • Check for mistakes on your credit report
  • Cut down on credit card utilisation

Research which cars that you want and create a car wish list

Once you have a better understanding of your finances you can start to focus on the type of car you would like. 

It’s a good idea to create a list of features that you require and ideally put them in rank order. That way, you’ll have a better idea of which features you won’t compromise on and those you may do. 

Make sure to also think about what your needs will be in a few yours. For example, if you are thinking of starting a family a two-seater sporty convertible may be fun now but impractical in the future. 

If you are still unsure exactly what car you want don’t worry. Our Sales Managers can help you with your car search.

Work out how much your old vehicle is worth

If you have an old car to sell or part-exchange it can help get your finance approved. The value of the old car can be used as a deposit in the new car loan deal and reduce your borrowing amount. Using an online valuation service should give you a good idea of how much your old car is worth. 

Don’t forget an online valuation is only a rough guide and the amount you get could be different due to many factors – including the condition of the vehicle.

Decide on a budget

Deciding on a suitable budget for your car purchase is an important step in your car-buying journey. Knowing how much you can afford to pay without overstretching yourself will ensure you don’t start looking at cars you can’t afford.

It’s worth remembering that car ownership costs aren’t just the cost of the vehicle itself. You also need to factor in the annual MOT, tax, fuel and maintenance. 

Apply for a Car Loan today

Ready to take the next step? Apply today for Car Finance and see how much you can borrow.