Jan24 Archives - Page 14 of 15

How Does Car Finance Work in the UK?

White car bought on finance driving past the houses of parliament in London

Affordable car finance plans are becoming more popular in the UK. But how exactly does the car financing process work? What are the criteria to be accepted for car finance? And are there different types of car financing?

In this post, we’ll explore everything you need to know about how car finance works in the UK. But first…

Car finance explained

For some people, buying a car outright just isn’t possible. For this reason, more and more people are opting for car finance plans as an alternative. Car finance is a great way to get the car you want. Especially, if you can’t afford the expense of one big, upfront payment for it. You can consider it to be similar to what you might get from personal loans.

So, how does car finance work in the UK? It allows you to drive the car without having to pay a lump sum upfront. Instead, you will be paying monthly payments for the car. It’s essentially a personal loan to cover the cost of the car, which allows you to spread the cost over a period of several months or years.

The lender does own the car until you have paid the borrowed amount, plus any interest or additional charges in full. However, you have full use of the car whilst you are still paying your fixed monthly repayments. And when you’ve paid in full, the car is yours to keep if that’s what you opt for.

Who is eligible for car finance contract options?

There are many factors that can impact your eligibility for car finance. Firstly, you must be at least 18 years old and be a resident of the UK. Generally, a finance company will not take on temporary residents.

Credit scores will also be taken into consideration. The higher (or better) your score, the more likely you are to be approved for a car finance plan. Lenders will also look at your employment. Things can become slightly more complicated if your income is reliant on benefits or you are retired.

If you are in stable, long-term employment, this can increase the likelihood of car finance lenders approving you. However, even if you have poor credit or bad credit history, it is still possible to get car finance with My Car Credit.

On top of all that, the car you’re looking to finance will also be taken into consideration. Costs aside, it needs to be less than eight years old when your agreement begins and less than twelve years old when the credit agreement ends.

How does financing a car work?

Most car finance plans can be tailored to you. You can opt for a bigger initial deposit to reduce monthly payments or a longer duration to spread the cost out further. The amount you pay each month, interest rates, the terms of the agreement and the length of your car finance plan will all vary, depending on what suits you and the lender best.

To begin with, there are a few different types of car finance:

Hire Purchase:

The simplest type of car finance.
Allows you to spread the cost, plus interest, across a set period of time.
Deposit is not always necessary, but an initial deposit will bring down the monthly costs and you can trade in your old car as a deposit.
The lender simply takes the price of the car (minus any deposit) and adds interest. The final figure is then divided over the term agreed, usually between two and five years.
Monthly payments will never change and there is never a big payment at the end of your plan.
Once you have finished paying the car finance plan, the car is yours.

There are some pros and cons to Hire Purchase, also called a personal contract hire. For example, there is a fixed interest rate and monthly payments with no annual percentage rate, mileage limit conditions or fines for wear and tear. However, you will not own the car until you have finished paying the car finance plan.

Personal Contract Purchase:

Although it offers lower monthly repayment options than the Hire Purchase route, this type of agreement is a bit more complicated. With a Personal Contract Purchase, you have an ‘optional final payment’ at the end of your car finance plan. This is sometimes known as the ‘balloon payment’. By deferring some of the cost of the car to be paid at the end of the plan, these fixed monthly payments are cheaper.

For the Personal Contract Purchase, you decide how much of a deposit you want to make and estimate your annual mileage and the length of the contract. Normally, this type of car finance plan is between 3 and 5 years.

Conditional Sale:

Conditional Sale is similar to Hire Purchase, but you pay higher monthly payments and do not have a fee at the end. As soon as you have paid the car finance deal off, the car is yours.

This type of plan is perfect for people who want to keep the car at the end of the plan, with nothing to pay at the end of the car finance plan. In addition, Conditional Sale allows for longer repayment terms, usually between 2 to 6 years. However, you will not own the car until you have paid the car finance plan in full and you must pay a deposit for a Conditional Sale plan. This is usually 10% of the car’s value. This will happen around the end of the contract.

For more information, take a closer look at the different car finance options available in the UK.

How do I apply to finance a car?

With My Car Credit, you can apply for car finance in just a few simple steps:

Complete an application form – fill in our simple online form and we will give you an instant quote for a car finance deal.
We will get in touch with you – one of our Car Credit Specialists will get in touch with you, answer any of your questions and advise on what might be best for you.
Choose a car from a dealer – we don’t mind if you have already found your car, just let our Car Credit Specialist know when they contact you. If not, we have some trusted dealers who can help you with your car finance agreement.
Say hello to your new car – we will do all the legwork with the lender and dealer, without it costing you anything.

Get in touch to discuss your car finance options

For an instant quote, use our car finance calculator. It takes into consideration your credit history, score and is simple to use. With the largest panel of lenders of any UK car finance broker, our chances of finding you the right car finance agreement are increased. We are open 7 days a week, you can call us on 01246 458 810 or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

Will I Get Accepted for Car Finance?

In the UK, there are multiple options when it comes to paying for your car. Given that a car is the second most expensive purchase you will probably ever make, after a house, it’s very important you get the right option for you.

You can purchase a car outright – which isn’t for everybody – or you can opt for car finance. Some car dealerships offer their own finance options, but this is problematic. How will you know if your application for finance will be accepted? And do you really want to visit a car dealer, choose a car and apply in-store – with the risk of being rejected in-person? There must be an easier way…

Read on as we answer all of your questions about car finance approval.

What actually is car finance?

Car finance is a credit agreement made between you and the lender, organised either directly with the lender, via your car dealer or using a car finance broker. Car finance involves paying for your car through an initial deposit payment, and then paying off the rest of the costs through monthly instalments. In the UK, it is common that car dealerships offer car finance options when consumers purchase a new car.

Can I get car finance?

There are several factors that can impact whether you can get car finance in the UK:

Age – To take out a car finance plan, you must be aged 18 to 75 years’ old.
Residency – You need to be a resident in the UK for at least three or more years. Most companies will not take on temporary residents.
Credit score – For most lenders, this is a big one. The better your credit score, the more likely you are to get approved, but some brokers – like My Car Credit – work with lenders who will take on applicants with poor or bad credit scores.
The car – The car needs to be less than 8 years old when you first take out the finance plan, and it must be less than 12 years old when the finance plan ends.
Employment – Being able to prove you are in stable employment will be favourable for most lenders. Normally, they ask for your previous three months’ bank statements and payslips to prove this.
Benefits – Most lenders will require at least half your benefits to be income based. Benefits that would count as a form of income are, Carers’ Allowance, Local Council Tax Support, Disability Living Allowance, Incapacity Benefit (long term incapacity), Tax Credits, Pension Credit and State Retirement Pension. For any other disability benefits, lenders are more flexible due to the nature of the benefit and will often accept government-funded allowance.
Retirement – Despite being out of employment, retired applicants may be in a good financial position. They would still be required to have proof of their income, whether that be from a pension, investment or property rental income.

What is a credit score?

A credit score is an expression which represents the creditworthiness of an individual. It shows someone’s credit history and lets lenders know what kind of borrower they are and how likely it is that they will manage repayments.

When you apply for car finance, your credit score will be looked at by your lender. People with a higher credit score are more likely to be successful when applying for car finance, and sometimes they can even get better interest rates. This is because they are considered as a ‘lower risk’ when compared to others with a lower credit score.

Lenders will use your credit score to tailor a car finance plan to you. If you have a higher credit score, some lenders will approve your car finance quicker and can often offer you lower interest rates.

Can I still get car finance if I have a poor credit score?

A credit score can impact on your eligibility for car finance, but a poor or bad credit score doesn’t always rule you out. If you have a poor credit score, you will have to jump through hoops with some lenders. The worse the score, the more hoops you will have to jump through.

However, at My Car Credit, we aim to find a car finance option that works for people with a whole range of credit scores and personal circumstances. You can use our car finance calculator to work out if you will be accepted for car finance with your credit score – and to find the best car finance option for you from our large panel of lenders.

Would I get accepted for car finance?

You could go straight through your car dealer for your car finance option, but they often prefer to only offer car finance to good or excellent credit scores. At My Car Credit, we consider all individual circumstances, with the aim of making car finance as simple and accessible as possible.

We have the largest panel of car finance lenders meaning that we are more likely to get someone a car finance agreement. Our smart technology allows us to place you with the best lender for your circumstances in a matter of seconds. We also have a team of manual underwriters, who can assess your individual circumstances where we haven’t been able to find you a deal automatically.

Find out if you can get car finance

At My Car Credit, we aim to help you through every step of the car finance process to make the process as hassle-free as possible.

For an instant quote, and to see what car finance plan you are eligible for, please use our simple car finance calculator. We are open 7 days a week and our website has loads of helpful tips, guidelines and answers to any questions you have.

For more information, call us on 01246 458 810 or email us at enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance criteria car finance eligibility credit score Jan24 poor credit

How Much Does Car Finance Cost? Check Now!

Calculator on desk used to work out how much car finance costs

Picturing yourself behind the steering wheel of that new car? Then it’s time to look at car financing options. But with your finger hanging over the button to submit your online application, there is usually one question burning in the back of your mind... How much will it cost me to finance my car?

While costs and rates can vary from person to person, depending on their circumstances, My Car Credit aims to keep things simple.

Read on to see how we do our calculations and make every effort to get you the best car finance deal available from our large panel of lenders.

1. APR Calculator

First off, to get a rough idea of the finance charges on a new car loan, try out our car cost calculator. By entering the relevant details, you will get an indication of the Annual Percentage Rate (APR) and have an overall view of all the costs involved, including the cost of monthly payments. Nothing is set in stone, with zero obligation on your end. But now that you have an estimate to work with, you can send in your application and let us do all the hard work for you.

2. Our Process

Once your application has been submitted, we first make sure we have everything we need. After the compliance phase, we look at suitability, eligibility, affordability and vulnerability by means of an aggregator.

This one-of-a-kind decision-making system aims to find our customers the best possible deal without affecting their credit rating or even slowing down their application. By automating and streamlining this part of the process we can provide consistent, compliant and auditable decisions for our clients, without adding any additional costs.

With comprehensive car finance offerings (from poor credit right through to excellent credit) and loads of experience backing our efforts, we are primarily concerned with making this testing part of the car buying journey a faster, hassle-free and more enjoyable experience. The last thing we want is for you to be plagued by unnecessary delays, costs or extra paperwork.

3. Car finance options

As part of Evolution Funding, we have access to a large pool of car loan companies. This means we can submit to more than 34 finance lenders at the same time and hunt down the sweetest deal for every individual, no matter how unique their circumstances.

With all these means at our disposal, we are better placed to find you the package that best suits your means than any other car finance broker.

4. Communication

We know how frustrating it can be to be in the dark. There is nothing worse than a lack of communication. That’s why we stay in touch and give updated feedback every step of the way, keeping you informed of how your application is progressing and what options are available to you. Our aim is to provide unequalled communication to our customers.

Find out how much a car loan costs

If you want to find out how much car finance costs, it couldn’t be simpler with My Car Credit. Click apply now, fill in your details and get a clear estimate for the cost of your car finance. It’s that easy.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

apr calculator car finance calculator car finance options car finance process Jan24

How Long Does Car Finance Approval Take?

checking how long car finance takes using apple watch

Your dream car is beaming on the screen in front of you. It has your name written all over it. Now that you’ve made the decision to buy your new car, the next thing you need is car finance. But how long does car finance approval take?

Read on to find out which factors affect how long it takes for a car finance application to be approval – and what you can do to speed things up.

Times are changing

Car finance approval has something of a reputation for being long and drawn out. That’s mostly down to the old-fashioned approach to car finance. Traditionally, you’d need stacks of paperwork, lengthy credit checks, back-and-forth communication and multiple submissions to financial institutions.

Nowadays, thanks to digital advances, car finance approval has become much easier and quicker. Buying a car and applying for credit online is as simple as clicking here and there, completing the online questionnaire and tapping on the final prompt to send the application.

That said, there are some ways you can make it quicker…

How can I get car finance approved faster?

While it’s difficult to estimate how long car finance takes to process or how many days are required to get your car loan approved, it’s helpful to know how you can speed things up from your side.

1. Budget

Whether you shop for your car first or wish to apply for car finance first, you still need to have an idea of what you can afford in terms of repayments. Use a car finance calculator to provide you with some rough calculations before you set off. Enter the loan amount, repayment period and try to get your bearings before you complete the application.

2. Credit rating

While we aim to help drivers with any credit rating, some small improvements can go a long way. Cancel out-of-date credit cards and complete the application as truthfully as you can. Check if your credit profile is linked to someone else or if there is any missing information on your credit report.

3. Documents

Online applications are much easier and faster than the old-fashioned way. But you’ll still need a few key documents along the way, including your driving licence, bank statements and proof of employment and earnings.

To save yourself time, try to get those documents ready before you apply for car finance. Scan them onto your computer and keep the physical copy on hand just in case.

Quick, hassle-free car finance approval

My Car Credit has taken every measure to eliminate the hassles of car finance approval and streamline the process for you. With more than 34 trusted car loan companies at our disposal, you can rest assured that we’ll be hunting for the best possible car finance deal available from our large panel of lenders.

Use our car finance calculator now to check how much you can borrow.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

approval car finance calculator credit rating Jan24 process

How to Get an Excellent Credit Score

An excellent credit score of 800 or over is exceptional. It means you’ll pretty much be accepted for any finance loan and you’ll get the best offers and interest rates. However, building this kind of excellent credit score takes time, effort and diligence. Here are some good ways to get started.

Credit score breakdown

Here’s a rough breakdown of how much each aspect of your financial history affects your credit score.

Payment History (35%) Never miss or be late on a payment
Amount of Credit (30%) How much credit and how many loans you’ve got
Credit History (15%) How long you’ve had credit
Multiple Credit Sources and Utilisation (10%) The types of credit you’ve got and how much you use them
New Lines of Credit (10%) Frequency of credit inquiries and openings

Never miss or be late on a payment

It’s simple: never, ever, ever miss or be late for a repayment. This is the fundamental rule of building a good credit score. If you can’t repay your credit loans in full and on time, a car finance lender will never be able to trust that you’ll stick to the terms of your car loan agreement.

How much credit and how many loans you’ve got

It’s important to have as many lines of credit open as you can manage to repay in full and on time. This proves to a lender that you are capable of managing your finances and spending sensibly. You can think of it as a track record of the way you look after your money: the more cases you have in your favour (i.e. the more lines of credit you have) the more reliable you appear.

How long you’ve had credit

Whilst opening new lines of credit is important, it’s also vital that you don’t close old ones. A large part of your credit score is determined by how long you’ve had your lines of credit open. So, even if you’ve paid off a line of credit (e.g. on a credit card) keep it open for a few years afterwards to strengthen your average credit length.

The types of credit you’ve got and how much you use them

It’s important to have multiple credit sources and optimise your utilisation on these sources. Utilisation is the measure of how much you use your cards, especially in reference to how close you are to ‘maxing out’ those cards. It is important to spread your costs over multiple cards as this proves to a lender that you are capable of managing your finances effectively.

Utilisation below 30%

Using multiple cards is important, however, it doesn’t mean anything if you’re using some too much and others not enough. It is vital that you keep your utilisation on each card at 30% or under, at all times. Consumers with FICO credit scores of 800 or more have an average utilisation of 11.5%.

You can calculate your utilisation rate on each card by taking the balance on the card and dividing it by the card’s spending limit.

For example:

Card	Balance	Spending Rate	Utilisation rate (%)
MasterCard	£1,000	£5,500	18%
Visa	£900	£3,000	30%

Frequency of credit inquiries and openings

Opening new lines of credit and inquiring into your credit options is important to building a strong credit score. When you first do this, your credit score will suffer. This is because somebody with more repayments to make presents more of a risk to a lender. However, your credit score will be stronger once you have made your first few repayments on time.

Building an exceptional credit score isn’t easy but it isn’t impossible. Follow these tips above and you’ll see your credit score improving in no time. If you’re worried about being accepted for car finance on your current credit score, don’t be. My Car Credit is open to discussing car finance options regardless of your credit score. Use our car finance calculator or contact us for more details.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

credit score excellent excellent credit score Jan24

What is the Best Way to Finance a New Car?

Red headed lady on laptop looking for the best way to finance a car

What’s the best way to finance a new car? If you don’t quite have the funds to buy a new car outright, you’ll be asking yourself this very question. In truth, there are several options, so it’s important to find the one that’s best for you.

Read on as we look at four of the best ways to fund your big purchase. But first…

Why would you finance a new car?

Whether it’s the fresh smell of the interior or the flawless touch of the steering wheel for the first time – nothing beats that new car feeling. While the most obvious way to pay for a new car is using your savings, not all of us have all of the funds needed up front.

Even for those who do have some savings put aside, it’s not always the best route. You might prefer to keep your savings for a rainy day and pay for the car gradually over time. That’s where car finance comes in. Financing a new car essentially means borrowing money so you’re able to afford a new car, then paying it back once you’ve got your new wheels.

Popular ways to finance a new car

Whether it’s brand new or just new to you, there are actually a number of ways to afford a new car. Here are some of the most popular:

1. Bank loan

When you need money, it’s only logical that many people’s first stop is the bank. While it works for some people, this option could be a bit too long-winded for some of the more eager drivers out there.

After a face-to-face meeting to discuss your loan, the bank will ask for seemingly endless documents to get your application sorted. They’ll also perform a full credit check, which could damage your credit score.

2. Car finance through the dealership

Another option is to get car finance directly through a dealership, which has two possibilities:

Hire purchase – After paying a deposit of typically around 10%, you’ll make monthly repayments until the car has been fully paid off.
Personal contract purchase – Alternatively, you can pay lower monthly instalments, leaving a final (larger) balloon payment at the end of the contract.

On the face of it, this seems very convenient. After all, you’d only have to make one stop when you’re buying your new car. However, like a bank, many of these dealerships will also do a hard credit check, which could put a dent in your credit score.

On top of that, because you’re borrowing directly from the dealership, the car isn’t technically yours until the full loan is repaid. For some, that can put a serious blemish on the ‘new car feeling’. In some cases, dealerships will also enforce an annual mileage limit or stop you making any modifications to your vehicle as you don’t technically own it.

3. Personal loan

Maybe you know someone who’s got a bit of spare cash, that could help you afford a new car. This option has clear advantages. Borrowing off a friend or family member usually means no interest – and even the most scrupulous relative or friend isn’t likely to perform a hard credit check.

However, ask anyone who’s gone down this route, and they’ll likely warn you off. Aside from feeling like a burden, borrowing off someone you know means you’ll constantly be in their debt. Enjoy giving them lifts everywhere…

If you’re ever late in paying or can’t repay them, you could even see your relationship ruined completely. It’s just not worth it when there are other ways to finance a new car.

4. Online car finance

One of the best ways to finance a new car is with online car finance. You can arrange your car finance before you’ve even found your car, then simply choose the car you want from any car dealer. Rather than borrowing directly from the dealer and paying them off gradually, the money will be transferred immediately to them so your car is completely yours the day you buy it.

There’s no hard credit check, meaning no impact on your credit score – and there’s much more flexibility for applicants with poor credit scores, who might be rejected by banks or car dealerships.

Car credit made easy

At My Car Credit, we want to make it easy for drivers to be able to afford a new car. Using our online loan calculator, you can get an instant estimation for your car finance based on the price, repayment duration and a rough idea of your credit score.

Based on the result, you can then choose to apply for finance or give it a miss – there’s no obligation either way. Best of all, there’s no impact on your credit score.

If you have a poor credit history, don’t worry – we can help with a bad credit finance too. Give it a try today to take the first steps towards that new car feeling!

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

bank loan car finance dealership Jan24 new car online car finance

What paperwork do I need to get a car on finance?

Applying for something finance-related can be daunting for anyone – finding all the paperwork and information that’s otherwise tucked away in a drawer or cupboard can be an overwhelming task. So, here at My Car Credit, we try to make it as easy and straight forward as possible. As with any other kind of finance application, car finance does require a lot of paperwork, but don’t worry because we are here to assist you with that – every step of the way. Here’s a breakdown of all the paperwork and information you’re going to need when applying for car finance with us.

Before the paperwork

We like to start your car buying journey on the right foot, which is why we only require you to complete a simple online application form to begin your car finance journey. This usually takes less than three minutes and asks you for some simple information such as your full name, date of birth, marital status, residential status and your address history for the last three or so years.

Once this has been completed and you have received your online decision on-screen (as well as by email and text), your personal Car Credit Specialist will be in touch to guide you through the whole of your car-buying journey.

To be able to help you with this, your Car Credit Specialist will require some initial paperwork from you.

Driving licence

Your driving licence will be required regardless of any other circumstances.

We need a clear, scanned picture of your driving licence. Alternatively, you can post it to us – don’t worry, we will keep this safe for you and will return it once we are happy that it is your own driving license and that you are qualified to drive the car that you are looking to buy.

Your driving license also acts as proof that you will be the owner and registered keeper of your new car.

A selfie

In order to prove that you are who you say you are in your application, we may ask you to provide a selfie of you holding your own driving license.

With the rise of technology, we have chosen this as a convenient way for you to prove your identity and a good way for us to be protected against fraud.

Proof of employment and earnings

My Car Credit require information on your employment and earnings, so that we can treat you fairly, as a person and a customer. We need to be able to see that you can manage your finances and can afford the agreement you are looking to take out – this is known as an ‘affordability check’. Essentially, we do this to make sure you are protected from getting into any financial difficulty in the future.

To begin your affordability check, we will need you to provide the names and addresses of all of your employers for at least the last three years (sometimes longer if you have frequently changed jobs, or have gaps in your employment history).

You may also be required to prove your earnings, which will require you to send us copies of your payslips, usually accounting for the last three to six months’ wages. This is a simple safety precaution to make sure that your wages are being paid to you.

We might ask you to provide bank statements dating back for a certain period to show your income. If most of your income is cash and doesn’t show up in your bank statements, you may need to show other information to back up your income claims (such as tax return information).

Alternatively, for your convenience, we may ask you take a clear photograph/clear scanned copy and email them to us. However, the copies must be clear enough for us to be able to read all of the details on them.

Bank account details

We will also need the bank account details for the account you will be using for your monthly payments. You will need to provide us with the branch’s address and sort code, as well as your account number.

The account usually needs to be in your name (or jointly in your name). Again, if you have less than three years with your current bank, you will probably need to provide previous bank details.

Where you have a joint bank account with a spouse, we may also need some financial information from them.

Additional information

If there are issues with any of your documentation, your personal Car Credit Specialist will advise you (and in some cases, require you) to give extra information to us. This isn’t uncommon and it’s certainly nothing to worry about.

The requirement for additional information can result from a number of circumstances. It can occur because you have recently moved to the UK and are therefore unable to provide three years residence information. In this case, you may be asked for overseas checks. Alternatively, younger drivers that may not have the relevant employment or credit history, might be asked to submit a guarantor’s information as well as their own.

There are a number of circumstances that may require the submission of additional information, and this should not be seen as a negative sign for your car finance. We only ask for this information to make sure we get the best finance deal for you, and to improve your chances of being accepted.
It is also important to take note that the types of paperwork we will require can differ depending on your credit profile and the lender we are able to match you with.

Here at My Car Credit, we want you to be in your new car as soon as possible so we are trained to help and advise you. Get in touch with any questions or why not start your car-buying journey now and click here to apply with My Car Credit?

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

application process car finance application driving licence Jan24 paperwork proof of income proofs

Old Car Finance: Used Car Finance Age and Mileage Requirements

Woman driving a car of low age and mileage bought on car finance

Ultimately, the limits on used car age and mileage will be determined by each individual car finance lender. These will also vary depending on your individual circumstances. In addition, each lender will have their own set of specifics when it comes to this area. However, there are some general guidelines around age and mileage that will help you when it comes to used car finance.

General rules

A car’s age at the end of the proposed finance term will be restricted to 12 years old. For example, when you apply for car finance loaned over a five-year period, the car cannot be over seven years old at the time of the initial purchase.
Your car’s total mileage will be limited to 100,000 miles from the start of the proposed car finance term.
There might be some mileage restrictions included in the term of your loan. Quite often, you may find some car finance lenders allowing for around 10,000 miles a year.
A less general rule involves the value of the loan. Some lenders will only agree to car finance for an older vehicle depending on the amount of the loan. Usually, this amount is set around the £3,000 mark, but this can vary.

The exceptions

Some of our lenders will review your application on a more individual basis. In exceptional cases, they may disregard some of the general rules outlined above. What’s more, factors such as the strength of your credit profile and the type of car you are looking to finance will be considered. In these cases, My Car Credit and the lender may request extra checks on the car, such as an MOT or HPI check.

Are you thinking of financing a used car that doesn’t quite meet the general guidelines? We’d advise you discuss it in more detail with your Car Credit Specialist at the time of your application? In conclusion, we’re here to help – from handling your application and helping you find a car to sourcing the best car finance lender for your circumstances.

How My Car Credit can help you find the right used car

As part of our promise to provide the best car-buying experience, My Car Credit offers a comprehensive My Car Search.

Our extensive stock feed of quality used cars is updated on a daily basis. Crucially, all the cars we have available are sourced from our network of trusted car dealer partners.

We take full responsibility for vetting all of our dealers for their credibility. This is based on their status with the Financial Conduct Authority (FCA), their financial stability and customer service standards. By choosing your car through us, you’ll get the best choice of cars, the best car buying experience and excellent after-sales service.

If you would like further advice or guidance on choosing the right used car for your budget, please get in contact on enquiries@mycarcredit.co.uk or call 01246 458 810.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car age car buying tips Jan24 mileage used cars

What is a Guarantor Loan?

Man hugging his dad after securing a guarantor loan

At My Car Credit, we understand that affording a car can be a challenge. A guarantor loan, where a third party agrees to pay your loan if you can’t make repayments, provides an alternative method of taking out car finance. Guarantor car finance is a big responsibility so it’s important you understand everything that’s involved in taking one out. Here’s everything you need to know about applying for guarantor loans.

How does guarantor car finance work?

A guarantor loan is the same as a normal loan and you are still responsible for making the agreed repayments. However, it also allows for a third party (normally a family member) to guarantee your lender the repayments (in case you fail to make them).

As such, guarantor car finance is ideal for drivers with a poor credit rating as it eliminates some risk for your provider. Lenders tend to give favourable rates to customers with a good credit score because it shows that they’re more likely to keep up with monthly payments.

On the flipside, a bad credit score or limited credit history presents you as a bit more of a risk for lenders. A guarantor car finance agreement simply means that they have an extra layer of security for loan repayments.

Your guarantor won’t have to do anything (or pay anything) for your guarantor car loan if you keep up with repayments. They’ll simply be a name on your car finance agreement. Only if you miss payments will they be called into action to pay on your behalf.

Picking a guarantor

Your guarantor can be anybody between the ages of 18 and 75 with a regular income – they don’t necessarily have to be a homeowner, but this would greatly increase your chances of being accepted. Due to the nature of guarantor car finance, it’s a good idea to make sure that your guarantor is somebody who trusts you to make the repayments, as well as somebody that you have a good relationship with.

Being a guarantor is a big responsibility – in the eventuality that you cannot meet your loan repayments, your guarantor would be liable for the debt instead. Most people tend to ask a member of their family or a very close friend.

Most importantly, it’s better if your chosen guarantor has a good credit score. Much like yours, their own credit history will be checked so lenders can see whether they’re likely to make loan payments when you miss them. It’s no use having a guarantor who will miss payments too, after all.

What they’ll need to provide us

To secure a guarantor finance agreement, your guarantors will have to go through the same checks and processes as you – they will need to provide their employment and financial history (i.e. income, bank statements, bank details), their proof of ID and potentially other documents, dependent on the lender’s criteria.

This is a standard procedure to reassure the finance lender that your guarantor is a suitable choice. Many lenders will conduct a hard credit search for both you and your guarantor, so it’s important to be aware of the impact this can have. Conducting a credit check for an unsuccessful loan application too many times can negatively impact their credit score, as it shows up on their credit file.

At My Car Credit, we always start with a soft credit check, which gives us an idea of suitability before proceeding with the application. This minimises the risk of you and your guarantor being rejected due to poor credit history. Please however be aware that should you progress, some lenders may perform a hard search on your credit files.

Once you and your guarantor have been accepted and all the boxes have been ticked, most guarantor loans are paid out to you within 48 hours.

Additional advantages of a guarantor car finance loan

Cost savings

The security of a guarantor loan for the lender means that you may be offered a lower annual percentage rate (APR) than you could obtain elsewhere. An APR is the money you have to pay in interest for borrowing money from a lender. It affects how much is added to each monthly payment on top of the cost of the car.

In simple terms, this means you’ll pay less in interest and less overall for your car finance deal.

Building your own credit rating

A guarantor loan means that you can build and improve your own credit score for the future, because (in theory) you should always make the monthly payments. This means that your chances of being approved for finance will be improving as you go along.

If you apply for car finance in the future, you might not need a family member as a guarantor. Strong credit history is also advantageous for things like personal loans and mortgage applications.

More likely to secure car finance

Choosing to take a guarantor loan can make it more likely for you to be accepted for car finance. Put simply, this is because having a guarantor makes you a much safer bet for a lender. It gives them a reliable back-up option that they can approach for payments.

This is another long-term advantage for your credit score, because continual rejections can contribute to bad credit. Choosing guarantor car finance means you could be accepted and avoid all those rejections showing up on your credit file.

What happens if you fail to make the repayments?

Failure to make your monthly repayments will mean that your guarantor will be liable instead. They will be expected to make the monthly repayments on your behalf. Should they also fail to make the repayments, both of you could be issued with a County Court Judgement (CCJ). This will impact both your credit profiles, as well as affect your abilities to obtain credit in the future.

A guarantor loan can be a good solution for certain circumstances but it’s important to remember your obligations to both your guarantor and the lender. Alternatives to guarantor car finance include:

Taking a higher interest rate

Going it alone rather than using a guarantor might not mean you’ll be rejected for car finance, but it could mean securing car finance with a higher APR. This simply means you’ll pay a little more than finance with a guarantor, because lenders don’t have that safety net for missed payments.

Shopping around

Remember that having bad credit or being a young driver with a limited credit history doesn’t mean you’ll be unable to secure finance. There are lots of lenders out there, each with their own criteria for car financing. Using a car finance broker like My Car Credit gives you access to lots of finance providers without the extra legwork that uses up your time.

Ready to take the next step?

If you feel that a guarantor car loan is the best option for you, why not check out our online car finance calculator to see if you are eligible, or, click and apply here with My Car Credit today.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 10.9%, annual interest rate (fixed) 10.87%, 47 monthly payments of £191.50 followed by 1 payment of £201.50 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,702, total amount payable £9,202.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance eligibility guaranteed car finance guarantor Jan24

Am I eligible for car finance?

Young people checking on ipad to see if they are eligible for car finance

Car finance is a great way of affording the car you want, allowing you to spread the cost of the purchase over a period of time. However, it can be difficult to know if this is the best option for you. We’re going to take you through everything that can impact your eligibility for finance so that you know where you stand.

Age

We know that ‘age is just a number’ but there are some restrictions on when you are eligible for car finance. The minimum age is 18, and the maximum age is 75. You must fit the age criteria from the beginning date of the agreement – i.e. you can be 17 and organise car finance with us as long as you’re 18 when your agreement starts.

Residency

You need to be a UK resident of more than three years. We do not usually accept temporary residents in the UK, but if you’re living in the UK and have an EU driving license, we may still be able to help. Also: To clear up a question we’re often asked – we do accept residents of Northern Ireland.

Credit score

Your credit score makes a big difference to your chances of being accepted and the terms of your agreement. The better your credit score, the more likely you are to have your car finance application approved and receive lower annual percentage rates (APR). An APR is the amount of interest you pay back for borrowing money from your lender.

If you have a poor credit score, you can still be accepted for finance but you may find that providing a deposit will help you to secure an agreement. There are also a number of ways to improve your credit score.

The vehicle

The vehicle you’re looking to finance must be less than eight years old at the start of your agreement, and less than twelve years old at the end. However, a poor credit history could mean that the age of the car is limited to a maximum of ten years old at the end of the agreement.

There are no limits to monthly mileage unless you’re on a leasing agreement, such as a Hire Purchase agreement. In this case, the usual mileage limit is 100,000, although lenders do have different criteria.

Click to learn more about the different car finance options.

Employment

You must be in stable employment and able to provide your previous three months’ bank statements and payslips. Stable employment history will be viewed favourably and may also help to reduce the interest rate that you pay on your loan.

If you’ve been in your job for less than three months, we may be able to help if you have been consistently employed in the past.

If you are self-employed, it can be more difficult to obtain car finance, but it is possible. You can read more about getting car finance when you’re self-employed.

If you work part-time, you will still have options. You will need to earn the lender’s minimum income criteria and be able to provide three months’ payslips.

Benefits

If you claim benefits you will need to prove that at least half of your income is from employment.

Accepted benefits as forms of income include Carer’s Allowance, Local Council Tax Support, Disability Living Allowance, Tax Credits, Incapacity Benefit (long term incapacity), Pension Credit, and State Retirement Pension.

If you claim disability benefit, lenders try to be more flexible due to the nature of the benefit and will accept government-funded mobility allowance.

Retirement

If you are retired, we’re happy to help – despite being out of employment, usually retired applicants are in a good financial position having had the time to build up a good credit history.

All you will need to do is have proof of income. This would need to come from a pension, investment or property rental income.

Due to the usual age group of retired applicants, lenders may want to minimise the term of the loan to help share any associated risks.

If you’ve found the perfect car and you’re itching to get behind the wheel but you’re not sure how you’re going to pay for it, finance is a great option. We hope this has given you a good overview of the factors which affect your eligibility for car finance, but if you have any questions, give the My Car Credit team a shout – we’re always here to help!

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!

or call 01246 458 810

car finance eligibility eligibility Jan24

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Get in touch to discuss your car finance options

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Your dream car is beaming on the screen in front of you. It has your name written all over it. Now that you’ve made the decision to buy your new car, the next thing you need is car finance. But how long does car finance approval take?

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