Here is some advice to help you manage your credit ratings when buying a new car and when you need to raise finance to do this.
- Understand how to use website calculators and comparison websites to compare the different credit options available.
- Search for the best finance deals to suit – there might be cheaper arrangements than the one offered by the dealer.
- Decide which type of arrangement is best for your circumstances NB: Some of the best new car deals are based on taking finance, for example.
- If you are considering a used car of any sort, ask to see any car finance check before you buy it.
- If the car is being sold without a car finance check make sure you buy your own vehicle check ie never buy a nearly new or used car without. A car finance check will tell you whether the car in question has been stolen, written off, or has outstanding finance on it. You’d be surprised how many motorists try to save money here then find out the car they paid a lot of money for still belongs to someone else. They could lose their car as a result.
- If you are car shopping for the first time perhaps and opting for a more expensive car than the average used car sale (ie £9000+), you need to understand the implications of failing to make any credit repayments on time (or miss them altogether) after leaving the car showroom. Not only could you lose your car but you will also end up with a poor credit record, affecting your financing ability in future life.
- Where in doubt check your credit status in advance. In fact we recommend everyone checks their credit report with the main two credit reference agencies, Experian and Equifax, so you know what is being said about you. Make sure everything stated is accurate, up to date and reflects your current circumstances. If you spot anything that isn’t correct, contact the relevant lender and ask them to investigate this for you.
Experian publishes a useful car finance guide with information on the most common credit options, including personal loans, HP, contract payment and hire plans, explaining how each is financed and what lenders are looking for from you.