Are you ready to drive away in your dream car? If the answer is yes, then securing the right car finance deal is a crucial step. But before you start your search for the perfect car, there are some things you can do to increase your chances of being approved for finance in 2023. In this blog, we’ll share our expert tips on how to prepare for a car loan and improve your chances of getting the car you want. So, buckle up and let’s get started!
Having A Deposit Can Seriously Boost Your Chances
One of the first things you should consider is saving for a deposit. Although no deposit options are available, a larger deposit will reduce the amount you need to borrow. By borrowing less, you’ll decrease the size of your car loan and potentially reduce your monthly payments or shorten your loan term.
Additionally, having a larger deposit can increase your chances of getting approved because the more you borrow, the riskier you may appear to the lender.
Understand Your Credit Score
Another important factor to consider is your credit score. When applying for Car Finance, lenders will take your credit score into account. It’s essential to know your credit score and where you stand, so you can make informed decisions about your finances.
If your credit score is lower than you hoped, don’t panic! There are several steps you can take to improve your credit score, including registering for the electoral roll, paying your bills on time, checking for mistakes on your credit report, and reducing credit card utilization.
Don’t Get Carried Away With Your Budget
Next, it’s important to research the type of car you want and create a wish list of features you require. This will help you stay focused on the type of car you need and prevent you from overspending. It’s also crucial to consider your future needs, such as starting a family, when selecting a vehicle.
Selling Your Old Car Help Help Finance Your New Set Of Wheels
If you have an old car to sell or part-exchange, it can help to get your finance approved. The value of your old car can be used as a deposit in the new car loan deal, reducing your borrowing amount. It’s recommended to use an online valuation service to get an idea of how much your old car is worth, but keep in mind that the final value may be different depending on factors such as the condition of the vehicle.
Don’t Overstretch Yourself
Finally, deciding on a budget is crucial. 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 important to remember that car ownership costs aren’t just the cost of the vehicle itself. You also need to factor in annual MOT, tax, fuel, and maintenance costs.
By saving for a deposit, checking your credit score, researching the type of car you want, valuing your old car, and deciding on a budget, you can increase your chances of getting approved for the car finance you need. So what are you waiting for? Apply for Car Finance today and see how much you can borrow.
If you are looking to finance your next car you may be a little confused about some of the financial jargon used. One such term is APR. We’ll break down what it means and how it affects your next purchase.
What is APR?
APR is a key factor to think about when it comes to car financing. However, you might wonder what APR actually is. It’s the annual percentage rate, or APR, to put it simply—a gauge of borrowing costs. It includes any additional costs or fees associated with a loan, such as origination fees or closing costs, in addition to the interest rate on the loan.
The APR on a car loan can have a significant impact on the overall cost of the loan. A higher APR means that you will be paying more in interest over the life of the loan, which can add hundreds or even thousands of dollars to the total cost of the loan. On the other hand, a lower APR can result in significant savings, as you will be paying less in interest.
When looking for a car loan, it’s critical to compare the APRs provided by various lenders. This will assist you in finding the loan that offers the most favourable interest rates and costs, ultimately saving you money. To make sure you are getting the best deal possible, you should also take into account other aspects, such as the loan’s terms and overall cost.
What’s the difference between representative APR and exact APR
The representative APR is the APR that a lender must quote to at least 51% of successful applicants. It is intended to give consumers an idea of the interest rate they can expect to receive on a loan or credit card.
The exact APR that you are offered on a loan or credit card may be different from the representative APR, as it is based on your personal circumstances and credit profile. Lenders take into account a variety of factors when determining the exact APR for an individual, including their credit score, income, and debts. As a result, the exact APR that you are offered may be higher or lower than the representative APR.
It is important to keep in mind that the representative APR is just an estimate and is not guaranteed. The exact APR that you are offered may be different, depending on your personal circumstances and credit profile. It is always a good idea to shop around and compare offers from multiple lenders to find the loan or credit card that offers the best terms and lowest APR.
What affects the APR offered by lenders?
There are several factors that can affect the APR you are offered on a car loan. These include:
Your credit score: Lenders use your credit score to assess your creditworthiness and determine how likely you are to default on a loan. If you have a higher credit score, you may be offered a lower APR.
The type of loan: Different types of loans, such as fixed-rate loans and adjustable-rate loans, may have different APRs.
The length of the loan: The longer the loan term, the more interest you will pay over time. As a result, loans with longer terms may have higher APRs.
The size of the loan: Lenders may charge higher APRs on larger loans due to the increased risk associated with lending a larger amount of money.
For more tips on how to save money on your next Car Finance deal, check out our guide on how to get the Best Cheap Car Finance Deals with Motorly.
What is a credit score?
A credit score is a three-digit number that represents your creditworthiness. It is based on information from your credit report, which is a record of your credit activity. The higher your credit score, the more likely you are to be approved for credit and to qualify for favourable interest rates and terms.
How does your credit score affect your ability to obtain car finance?
Your credit score is one of the factors that lenders consider when deciding whether to approve you for a car loan. A good credit score can improve your chances of getting approved for a loan and may also help you get a better interest rate on the loan.
What steps can a user take to improve their credit score?
Here are some steps you can take to improve your credit score:
Pay your bills on time: Late or missed payments can have a negative impact on your credit score.
Keep your credit card balances low: High balances can indicate to lenders that you are overextended and may have difficulty repaying a loan.
Use credit responsibly: Don’t apply for too many new credit cards at once, and avoid using all of your available credit.
Check your credit report for errors: Errors on your credit report can lower your credit score. You can request a free copy of your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) once per year.
Consider a credit-builder loan: This type of loan is designed to help you build credit. You borrow a small amount of money and make regular payments to repay the loan. This can help you establish a positive credit history.
What are the benefits of improving your credit score?
Once you improve your credit score, you may be able to qualify for credit cards and loans with better interest rates and terms. This can save you money on interest and make it easier for you to afford the things you want or need, such as a car or a home.
It is still possible to get Car Finance with a bad credit rating?
It is possible to get car finance with a bad credit score, although the terms of the deal may be less favourable. Lenders who offer car loans to people with bad credit may charge higher interest rates to compensate for the increased risk. However, options are still available to you.
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.
Whether you’re already in an IVA or considering arranging one, you may be wondering how it could affect your car finance application. Our quick guide can help.
What is an IVA?
IVA stands for Individual Voluntary Agreement. It is a legally binding arrangement between you and your creditors to pay back your debts. This means it’s recognised by the court and your lenders have to adhere to it.
It’s meant for people who can manage to pay something towards their debts, but can’t keep up with the repayment amounts their creditors are demanding.
Can I get car finance with an IVA?
A common question our customers often ask is how being in an IVA might affect their chances of buying a car on finance.
An IVA does limit your choices somewhat, is it still possible to get Car Finance. An IVA will affect your credit score. But just because you have poor credit, doesn’t mean you don’t have options.
Whilst we can’t guarantee that we can help, our panel of lenders can assist those with a variety of credit histories – including those who are in an IVA.
How Does an IVA Work?
An IVA is set up and run by a qualified Insolvency Practitioner (IP). They will put together the repayment plan (including how much is paid each month, and for how long), and act as the go-between an individual and their creditors, to check they agree with the set monthly outlay.
As long as 75% of the creditors give the go-ahead to the IP’s proposal, the IVA will go ahead. Monthly repayments will then be given to the IP, who will split the funds between the creditors.
IVAs are available to those in England, Wales and Northern Ireland, but not in Scotland.
If you are interested in finding out more, fill out our simple, no-obligation form today to see how much you can borrow today.
When shopping around for the best Car Finance deals, it’s only natural to worry about what effect it might have on your credit score. Many customers like yourself often check if they can get car finance before they proceed, or have even found a car that they want to buy.
At Motorly, we make the process simple, by allowing you to check if you can get approved before you formally take out car finance. By conducting a ‘soft search’ credit check at the start of your application, you can see what your options are without negatively affecting your credit report.
What is a Soft Search?
A ‘soft search’ is a simple credit check that allows us to see your financial history without showing this information to potential lenders.
How does Soft Search Car Finance Work?
It’s easy to get a quick quote with Motorly. By completing the quick application form we’ll be able to give you an idea of your monthly payments what you can borrow, based on your current financial position.
The process only takes a couple of minutes and you will be given a decision straight away.
No impact on credit score
Because we only conduct a Soft Search, it will not impact your credit score, even if you decide to not proceed. It also won’t affect your future ability to get finance.
To help ease the financial impact of coronavirus, car finance payment holiday plans have been introduced. Three month car payment holidays are available. Find out if you are eligible and how to apply.
The Finance Conduct Authority (FCA) has put this in place for leasing, personal contract purchase (PCP) and hire purchase vehicles (HP). It’s not just restricted to cars, these options are also available on bike and van finance as well. So if you’d like to apply for a payment holiday on your vehicle, then we’ll help you find out how.
what to do
To apply for a three month payment holiday plan we recommend that you contact your finance provider directly and as soon as possible. If your finances have been affected by the coronavirus pandemic, then you should approach your lender and explain your situation.
Many lenders have specific areas of their website where you can put in a payment gap request. Otherwise, you can give them a call. Each lender website may give you a specific telephone number to contact. You may experience difficulty getting through on the phone due to increased demand, but do persevere, especially if an online request is unavailable.
Whilst many people’s ability to make payments has been impacted, if you can still make your payments then this would be ideal. However, do not hesitate to ask for help. Lenders are not currently able to repossess vehicles due to coronavirus related financial difficulty. It is important to know that your interest will still apply throughout the payment holiday.
Your lender should be able to help you in other ways, if the payment holiday isn’t right for you. The best course of action is to contact your lender and see how they can help you in a way that suits you.
For more information, take a look at this helpful article from Which?.
When you’re scouring the market for car finance, you’ll often find your credit report mentioned. But why is it important? The better your score, better deals will be available to you. Check yours for free with UK Credit Ratings today.
Checking your credit file allows you to easily view your credit score. This lets you see how likely you are to be accepted, when you do decide to go ahead and apply for finance. By simply registering with UK Credit Ratings for free, you can see your score with zero charge.
Seeing where your score lies lets you decide when is the right time for you to apply for car finance. You may find your credit report is excellent – great stuff! And so you’re happy to go ahead. Or your score could be poor to fair. This may lead you to wait a few weeks until you build your score back up again before applying.
Not only can you check your score for free with UK Credit Ratings, but they’ll also give you tips on how to improve it. Helping you to increase your chances of being accepted. Win win!
Don’t apply for car finance blindly. Let UK Credit Ratings help you view, increase and grow your score today. Find more tips & tricks on how to improve your chances of being approved for car finance on the motorly blog.
*Free 14 day trial. If you wish you continue using the service, the monthly subscription is only £19.95. Cancel anytime during the trial with no charge.
When applying for car finance you will often come across the terms soft search and hard search. But what do they mean? And do you know the difference? We are here to clarify this, separating fact from jargon.
what is a soft search?
A soft search checks how likely you are to be accepted for finance, without affecting your credit score. This means a search cannot be seen by lenders. Only you are able to view soft checks on your credit file. So this will not affect a lenders decision.
Think of a soft search as a preliminary check, which calculates the probability of being accepted without performing a full search on your credit report. With this in mind, consumers are able to shop around to find the best deal for them. Comforted by the fact that these searches will not be seen by financial lenders. In theory, this means it doesn’t matter how many searches you have, as they are invisible. Spooky, we know.
However, a soft check is an indication of how likely you are to be accepted for finance. Meaning, the outcome is not always guaranteed when a full hard search is then later carried out.
what is a hard search?
In contrast to a soft search, a hard search can be viewed by lenders when deciding if you are a good candidate for finance. A hard search will check your credit file and leave a mark of this check. Most hard searches will stay on your credit report for 12 months.
Here at motorly we never perform a hard search. Our partners’ only complete a soft search when checking the affordability of finance for our customers. A hard search is only ever done with an individual’s permission when you want to go ahead with a full application.
Obviously, once a complete finance application is submitted by a lender, this will incur a hard check. But at this point, the customer is happy with their proposed financial plan and are simply completing the final stage. You will now have finance in place and be ready to receive your new vehicle. This is the fun part.
apply today
Rest assured when you complete an online finance application with motorly that we only ever perform a soft check. So, whether you are looking for your next car, van, bike or caravan we can help. We are an independent broker that searches the market for you, with zero impact on your credit score. Walk into a garage with your finance approved. What are you waiting for?
Our easy to use online calculator makes this process easier than ever. Simply drag & drop the buttons up or down to suit your needs and reveal your estimated loan and repayment amounts. Fill out our quick quote form and let us find the right vehicle for you. It’s that easy.
