How Can Loanable find me Car Finance?
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What is a Car Finance?
Car finance is a type of finance that allows you to purchase a vehicle – whether it’s a car, a motorbike, a van or a caravan. Most people need a vehicle for their personal and professional lives.
However, fewer than 20% of people can afford to buy one.
That’s where car finance comes in by providing the money you need to get the vehicle you want.
Car finance options can be slightly varied, but don’t worry about it. The most important thing to understand is that you are being provided money to buy a vehicle.
Types of Car Finance...
Hire Purchase (HP)
Hire Purchase is the most common type of car finance. With hire purchase, you are approved for a set amount of money by a finance company and then are free to choose any car within that budget. The finance company then purchases the car and essentially leases it to you.
You agree to pay the finance company a set amount of money over an agreed period of time until the balance is paid off. Once paid off, you have the option to have the car transferred into your name (normally for a small fee of £10).
Personal Contract Purchase (PCP)
Personal Contract Purchase is like HP in that you choose the car, the finance company purchases it and then leases it back to you. You still pay the finance company monthly payments as with HP. However, the amount you pay will be less.
At the end of the payment term, you can make up the difference with a “balloon” payment and take ownership of the car. Or you can give the car back and get a new car. PCP generally requires a higher credit rating than HP and is better suited to people who don’t want to own their vehicle and will generally wish to lease a new one every few years.
A car loan is personal loan whereby a finance company gives you the money directly and it’s up to you to then purchase a car. In this case, the finance company does not have a charge on the car you are purchasing.
However, you will enter a legally binding contract to pay the money back. Car loans can be both a cheap and expensive way to borrow depending on your credit profile.
A Guarantor Loan can sometimes be used by people with very poor credit wishing to buy a car. You will still be responsible for making the repayments but if you default, your guarantor will have to make them on your behalf.
Typically, your guarantor will need to have a good credit rating and provide a proof of income at a level considered satisfactory by the lender.
FAQs about Car Finance
What Is Car Finance?
Car finance is a form of finance that enables customers to purchase a vehicle. That vehicle can be anything from a car, motorbike, van or even caravan.
How Much Does Car Finance Cost?
The interest rate that you pay depends on several different factors. Your credit worthiness has a big impact on the type of finance that will be available to you. For example, if you have a good credit profile then you can borrow at rates starting from 6.90% APR. If you have a history of defaults and poor credit, then your options are more limited and you could end up borrowing at rates of 49% APR. Don’t worry, we will assess your application and match you to the most suitable and cost-effective lender.
Do I Own the Car?
Most of the car finance that we arrange for clients is known as HP or hire purchase. In this case, once you are approved by a car finance company, the finance company will purchase the car and let you use it. You will make payments to the company until the finance is fully paid off. At that point, the car can be transferred into your name. However, in certain instances we will find a finance company who will give the money directly to you and it will be up to you to purchase the car.
Personal Contract Purchase(PCP) customers make lower monthly payments than with HP and would need to make a bigger payment at the end of their agreement to purchase their vehicle. Typically, PCP customers don’t seek to buy their vehicle at the end of their agreement and will instead lease another one.
Do I Need to Find a Car Before Being Getting Car Finance?
No. It is not an absolute requirement from a lender that you have already chosen a car. However, it does help if you have some general idea of the type of car that you want and the budget you have in mind. Once you have been approved for finance, you will be informed exactly how much you have been approved for. The finance company will also have certain criteria you will need to adhere including things such as the age of car, its mileage and the reputation of the dealership. Once you understand the criteria set by the finance company you can also search for a car in our partner’s members area that lists over 110,000 used cars.
Once I Have Been Accepted Can I Choose Any Car I Like?
No. Each lender will have their own criteria in terms of the type of vehicle you can buy. You will of course be provided with the exact details of the criteria the car must meet.
How Long Does It Take to Be Approved for Car Finance?
87% of all applicants receive a decision on their finance within the first 3 minutes. It can take slightly longer for the remaining 13%. Once you have been approved for finance, assuming you want to proceed, a loan underwriter will request more information (passport I.D. etc) and process the application further. The whole process can be complete in as little as 2 days but a lot of it depends on how promptly you meet requirements at your end.
Do I Need to Put a Deposit Down for Car Finance?
No. It is not a requirement from lenders that you put a deposit down. However, if you can afford to do so, it will lower the amount you borrow.
What About Part Exchange - Can This be Used as a Deposit?
Yes. A part exchange can be used as deposit for a new car. This is usually looked upon favourably by a lender as it shows you have more ‘skin in the game’ and lessens their risk. A deposit coupled with proof of affordability is looked upon well a lender.
Can I apply for finance for a second-hand vehicle?
Yes. We can submit your application to specialist lenders who would certainly consider this, subject to the condition of the vehicle and the repute of the dealership. However, we could offer no guarantee they would proceed. We also have a database of over 110,000 used cars that you can utilize.
Does my age affect my ability to apply?
No. As long as you are at least 18 years of age, we can match your application to lenders who provide car finance to valid license holders of all ages. At Loanable, we have a high success rate in providing car finance for younger drivers, older drivers and everyone in between!
Does that mean I can still apply for car finance as a retiree living on a state pension?
Yes it does. We work with a number of lenders who cater for customers matching your requirements.
As an 18 year old who has just passed their test, never owned a vehicle and has no credit history, can I still apply?
Yes you can. We work with various lenders who deal with customers with little or no credit history. We would still, however, recommend establishing a credit history by ensuring you have a bank account and by doing things such as joining the electoral register.
I have a bad credit rating and have been refused car finance elsewhere. I now have someone willing to act as a guarantor. Is it worth making a new application through Loanable?
Yes. We have a number of lenders on our panel who offer car finance to applicants wishing to appoint guarantors. While we can offer no promises, it’s definitely worth applying should you still wish to go ahead.
Unfortunately, I have 3 points on my license having previously been banned. Can I still apply?
Yes. We can approach a number of lenders who provide car finance to people with points on their license or who have previously lost their license. You will of course need to hold a valid driving license, though.
As a UK-based citizen with an EU driving license, can I still apply for car finance in the UK?
In general, an EU citizen would need to have proof of address for at least the last 3 years within the UK and would need to have a UK bank account with proof of income. Good credit rating and registry on the UK electoral roll may also be required. We have lenders on our panel who will consider such applicants. The impending exit of the UK from the European Union may have an impact on lenders’ decisions, though.
Will Loanable charge me a fee for finding me a lender?
No we won’t. At loanable, we charge absolutely no fee for matching you with lenders.
If I have CCJ’S, IVA’s or defaults against me, can I still apply?
Yes you can. We work with various lenders with expertise in providing car finance for customers of almost all types of financial circumstances including the above.
I have bad credit rating and am self-employed. Should I still apply?
We help provide car finance to numerous people in similar situations. While we can’t guarantee finance, we work with a number of lenders who have provided car finance to people with bad credit
I am on benefits and have a bad credit rating. Can I still apply?
We work with lenders who will consider providing car finance to people on benefits and with bad credit. You will need to provide bank statements showing your benefit income. If you are on the electoral register, this may also increase the chance of a successful application.
I was unable to get car finance through several of your competitors. Should I still apply to Loanable?
The simple answer is yes. Here at Loanable, we pair your application with an extensive panel of potential lenders. There’s a good chance we can match you to a lender your previous broker did not have a relationship with.
I currently only hold a provisional driving license. Can I apply for car finance?
Yes. We can connect you to a number of lenders who provide finance to provisional driving license holders.
I have fallen behind on existing loan repayments. Should I still apply?
It would be unwise in your circumstances to take on a further loan – even if you were accepted. However, car finance is just one of a number of different types of loans we provide at Loanable. You should visit our homepage and consider applying for a debt consolidation loan with us. This could help us connect you with a number of car finance lenders down the line if you are able to first address your circumstances.
I have never previously had any credit and so don’t have a credit history. Can I still apply?
This shouldn’t necessarily be a problem. As long as you can show proof of address through a bank statement and have a UK driving license we can match you to various lenders. Your chances of success and number of potential lenders will be increased if you can show you are on the electoral role.
Can I choose my own dealership?
Our lenders work with a comprehensive list of approved dealerships up and down the country. You would need to choose your vehicle from one of these pre-approved dealerships or choose from our database of vehicles. If you’re unsure who or what to choose, our lenders can help you find the right match.
Can I choose a loan for a car being advertised privately?
It is unlikely you will be able to receive a loan for a car not listed within our lenders list of approved dealerships or amongst our vehicle database.
I am in the armed forces and am often based overseas. Can I still apply?
Yes. Providing you have a valid driving license, proof of income and a UK address, we could have your application in front of our lenders as early as this afternoon.
What documents will I need to provide to apply for car finance?
You will need proof of address, a valid UK driving license and proof of income. Some lenders may require additional documentation, however.
I have a fair credit rating, but I am self-employed. Can I still apply?
Yes you can although some lenders may require documentation in addition to the mandatory ones such as historical records of your business accounts.
I am a recently – disabled person living on a disability allowance. Can I apply for finance for a disability – adjusted vehicle.
At loanable, we work with lenders with a history of providing loans to customers who share your criteria so the answer is yes.
Can I end my agreement early?
Depending on your car finance provider, you may be able to end your agreement early. This is what’s known as voluntary termination. If the lender agrees to you ending the agreement early, they will require a settlement fee. This is the outstanding amount you must pay to end the agreement. You may also be able to pay the total, outstanding amount early in one sum but this will also incur fees.
Can you help find finance for vehicles other than cars?
Yes, we can also find finance for motorbikes, vans and caravans.
Can I apply for a loan if I don’t have a bank account?
It is possible, but as you can imagine it limits your options. However, if you have proof of address, some proof of income, appear on the electoral register and can potentially find a guarantor, there may be some options available to you.
I’ve heard I would have to provide proof of address for the last 3 years to receive a car loan. I can only do so for the last 18 months. Should I still apply?
Yes. We work with lenders with track record of dealing with customers with your set of circumstances.
I am due to start a new job shortly but I am not currently employed. Can I still apply?
Yes. As long as you have a contract of employment we can match you with lenders who are open to your particular circumstances.
Does having a fair or good credit rating guarantee car finance?
While there is no such thing as guaranteed car financing, these types of credit status significantly increase the customers’ chances of success.
Can I take a holiday from my re-payments?
No. Your finance agreement will require repeated monthly repayments. Initial failure to make these payments will lead to the build up of interest and will have a detrimental affect on your credit rating. This may then lead to your vehicle being re-possessed and a CCJ order being placed against you as well as an order for court costs. It is, therefore, very important you don’t enter in to an agreement unless you are confident you can meet your repayments. You must make it known to your lender as soon as possible should there be a change in your circumstances during your agreement.
Should I seek extra finance before applying?
Numerous applications for finance can leave what is known as a “foot print” on your credit rating. This can adversely affect your credit rating and your ability to receive finance. We would, therefore, advise against numerous applications for finance.
How are monthly payments made?
They are made through a contract that will exist between you and your lender which will involve a fixed amount being debited from your nominated account on a corresponding date each month