Traditionally, car buyers would head straight to the dealer when looking to get a car on finance. It’s an easy way to find a car you like and then make a credit application with the dealer to send to their panel of lenders. One of the biggest issues with this way of securing finance is the dealer may be limited to the number of finance lenders they use. They may have the car you want but their finance options may not be suitable for your circumstances. This is when the finance first approach comes in and helps you to get the best deal for your situation with the freedom to choose the car you want.
How to secure finance for yourself?
You can find your own car finance deal in a number of ways. Firstly, you can apply online directly with the lender. Finding a reputable and trusted UK lender is key and you can check their legitimacy by verifying their status with the Financial Conduct Authority. Lenders will also need to be a member of the Finance & leasing Association and need to comply with the Lending Code. You can then make an application with the lender to get a finance quote. This route can be time consuming if you need to apply with multiple lenders and could potentially harm your credit score.
Another way you can get a finance deal in place is by using a free car finance broker. A broker is essentially the middleman between the customer and the lender and works on the customers behalf to get the best finance deal for their situation. Brokers usually have access to a wide lending panel with multiple finance packages on offer. Brokers are free to use for the customer and make money by charging lenders for the introduction to the customer, however it can be worth checking if the broker charges any fees. A free to use UK car finance broker can help to find you the best finance with the lowest interest rate. You can then use your finance deal at any participating dealership to get a car within your budget!
Why is it beneficial to sort your own finance?
There are a number of reasons why drivers are choosing to sort their own finance before choosing the car they want. Not only can it be a fast and efficient way to get a car, but it also means you can get a better deal than you would if you were restricted to dealer finance.
1. Save money.
The biggest reason to sort your finance for yourself is the ability to save money on your next finance deal. By taking back control of your finance, you can search for the best deals and choose the finance agreement that’s right for you. Car dealers are usually limited to the finance they can offer and jumping straight in with the first finance deal you’re offered can cost you. Researching different lenders and the rates they currently have on offer can help to get a better deal.
2. Protect your credit score.
Car dealers may have lenders on their panel who want to provide a hard search on your credit report. Multiple hard searches on your credit in a short space of time can have a negative impact on your credit score and for those who already suffer with bad credit, it can be detrimental. By using a car finance broker to help sort your finance, you can protect your credit. Most brokers stick to soft search applications which won’t be recorded on your report or have an impact on your score either! If you’re unsure, you can ask the broker which type of credit search they use when you apply to make sure your score won’t be affected.
3. Calculate your loan before you apply.
Many online lenders and brokers now have free Hire Purchase car finance calculators to see how much you could borrow before you even apply. Hire purchase finance is one of the most straightforward forms of finance and based on your credit score, monthly budget, and loan term, you could get an instant result of how much you could borrow. Once you apply, a lender will assess your situation and offer you a finance deal similar to what you were quoted.
4. Better chance of securing finance.
Unfortunately, car finance can’t be offered to each and every applicant who applies and it would be irresponsible for any lenders to offer finance to anyone who can’t afford it. To help prevent this, lender put criteria in place which applicants will need to meet first before they could secure finance. Dealers may be limited to the lenders on their panel and if you don’t meet the requirements of those lenders, you could be refused car finance. You have a better chance of securing finance when you shop for finance yourself or apply with specialist lenders, such as those who deal with bad credit loans or benefit income applications.
5. Only shop for cars you can afford.
There’s nothing more disheartening than falling in love with a car but finding out the finance is too expensive. By doing your research first and calculating your loan before you apply, you can get an idea of how much you could borrow. Knowing how much you would be offered and sorting your finance first can speed up the process as you can shop for car that are only within your budget. Using the finance first approach means you have the freedom to shop for a car from any trusted dealership.
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