Jan24 Archives - Page 8 of 15

How to Use a Car Payment Calculator – What Can I Afford?

Shopping for a new car is exciting. From choosing the make and model you like through to deciding on accessories and design features, finding a new car is serious fun. But financing that purchase might be a different matter.

After a house, a car is likely to be the second highest purchase you ever make. As such, finding the money for that purchase may seem overwhelming, as you’re unlikely to be able to pay via cash up front. That’s where car finance can help. Car finance is a credit agreement that allows you to have full use of the car. You simply pay off via a series of pre-agreed monthly instalments plus interest. There are different kinds of car finance, and the right one for you will depend on your circumstances.

One of the key tools that will help you to determine the kind of car finance you can afford is a car finance calculator, and this article breaks down how to use a car payment calculator in order to calculate the kind of loan you can afford.

How to calculate your car finance

If you’ve started your search for car finance, you may have heard of the 20/4/10 rule. Per this rule, you should use the following parameters to find car finance that works within your means:

Make a down payment (deposit) of at least 20% of the car’s value
Choose car finance for a maximum of four years
Only spend 10% of your gross monthly income on the vehicle

Limiting expenditure on the car to 10% of your gross monthly income is arguably the most important thing to remember. Within this percentage, you also need to accommodate the vehicle’s running costs, like its insurance, maintenance expenses and fuel. This will also vary depending on factors including where you live and your annual mileage, but Nerd Wallet reports that it costs an annual average of over £3000 to run a car in the UK.

Establishing the budget that you have to work with for your car finance is therefore a vital first step. It will differ from your peers depending on the above factors (namely your salary and the running costs you can expect to pay for the car). Without establishing this budget in advance, you won’t have all of the information to know what you can afford, so it’s worth doing so before you use a car payment calculator.

Remember, you can often find car finance deals that will allow you to make smaller payments over longer periods of time, but this does mean you’ll be paying more on interest. This is why putting down a large deposit can have serious advantages, as it will make your monthly repayments smaller.

To calculate the kind of car finance loan you can afford, you’ll also need to know your credit score. You can use Experian’s free credit score checker to get this.

Once you’ve taken stock of your financial situation and set out a budget you can work with, you can use our car finance calculator to get an indication of what you’ll be able to borrow from us via an APR, a monthly repayment figure, total cost of credit and total amount payable.

What’s the APR?

All of the above factors will determine the annual percentage rate of interest (APR) that you’ll pay on your car finance.

You can get an exact APR (also known as a personal APR) by filling in our car finance calculator and choosing the ‘Apply now’ button. From there, you fill in a form which provides us with your personal information and financial history, as well as the kind of deal you’re looking for. We can then give you an APR.

Find out more about car finance today

If you have further questions or concerns about car finance, you can contact My Car Credit on enquiries@mycarcredit.co.uk. Our friendly team of specialists is on hand to address any queries you have, and will help to find you a finance agreement that works for your unique needs.

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

What Does ‘Finance’ Mean When Buying a Car?

When it comes to car finance, there’s a lot of jargon and acronyms, and it’s easy to find yourself questioning what each finance agreement really means.

This post aims to help you get to grips with what different types of finance actually mean when buying a car, and how they work. Once you’ve understood the different kinds of agreements available, you’ll be on your way to securing a car loan quote that will work for your circumstances.

So, what does ‘finance’ mean when buying a car? Read on to learn more…

What does ‘finance’ mean when buying a car?

In essence, car finance makes the purchase of a car more affordable. It’s a credit agreement between you and the lender, allowing you to make full use of the vehicle whilst paying it off in cost-effective monthly instalments according to a pre-agreed schedule. The amount you pay off will also include additional interest on top.

What are the different kinds of car finance?

The right car finance for you will depend on the kind of agreement and terms that you’re looking for, as well as your own driving preferences and needs.

Car loan

A car loan is a type of personal loan but is specifically designed for use on vehicles.

With a car loan, you borrow the money from either a bank or building society. Once you’ve bought the car, you are its outright owner. You’ll repay the car loan over time via instalments, with added interest. Typically, a car loan is more likely to be granted to those with a good credit score – there are other kinds of car finance available for those with poor credit ratings.

Personal Contract Purchase (PCP)

Do you like mixing up the vehicles you drive? Are you happy sticking to mileage caps or paying excess fees for any vehicular wear and tear? Would you like flexibility in choosing whether or not to own the vehicle at the termination of the agreement? Then PCP is potentially the car finance for you. In fact, PCP is the most popular kind of car finance because of its low monthly repayments and flexibility.

With PCP car finance agreements, you’ll pay a deposit and monthly instalments (plus interest). The larger your deposit is, the lower these payments will be. These payments are typically lower than other kinds of car finance as you’re only paying for the car’s depreciation in value during the time that you’re using it.

You can also choose whether or not you want to own the car once you’ve fully paid off the finance. If you do, you’ll pay a final balloon payment to make up the remaining value of the car. If not, you can hand the car back to the dealer with nothing more to pay. Be aware that you won’t own the car unless you opt to do so at the agreement’s termination.

Hire Purchase (HP)

Hire purchase car finance is similar to PCP, but a little more straightforward. You’ll typically make a deposit of around 10% with HP finance, then make fixed monthly payments according to a pre-determined schedule. Repayment terms can be relatively flexible, and there are often competitive interest rates with HP finance.

Like with PCP, you won’t own the vehicle until you’ve made the final repayment of your agreement, but you can opt to do so with a final balloon payment. After this, you can choose to part exchange, sell or keep the car. However, unlike PCP, you won’t usually face mileage caps, so HP finance may be preferable for you if you’re regularly making long journeys.

Personal Contract Hire (PCH)

PCH car finance is when you lease the car, which is why it’s also known as a car leasing agreement. You will never be its outright owner – you’re essentially hiring it until the end of your finance agreement. In this way, PCH differs from either HP or PCP. Though it’s technically not car finance, as you’re not borrowing money, you’ll still see this term frequently used when discussing car financing options.

With PCH, you’ll typically pay a non-returnable deposit as well as your monthly repayments. At the agreement’s end, you’ll hand the car back. If you’ve gone over the mileage cap or have made unreasonable vehicular wear and tear, you’ll pay a penalty fee.

Find the right car finance for you with My Car Credit

Shopping around for car finance can seem stressful, but it needn’t be. My Car Credit aims to make the process of securing your dream deal stress-free and streamlined. Contact our expert team today on enquiries@mycarcredit.co.uk to start your car finance journey.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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What Credit Score is Needed to Buy a Car?

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 options car loan finance options hire purchase Jan24 pch PCP

Can I Finance an Automatic Car?

There are a number of benefits to automatic cars. From fuel efficiency and ease of use through to being more comfortable to drive during stop-start journeys in urban centres, there’s a reason why people opt for automatic vehicles. But can you secure car finance on an automatic car?

Can you finance an automatic car?

Yes, you absolutely can finance automatic cars. Your finance broker will be able to work with you to find a car finance deal that suits your circumstances, as well as covering the kind of car that you’re looking for, whether that’s a manual or automatic model. In fact, My Car Credit can even help you find car finance with poor credit, working with all kinds of drivers from a range of different backgrounds and with differing requirements.

This is obviously great news if you passed your test in a car with an automatic gearbox, as you’ll only be licensed to drive vehicles with automatic transmissions. However, many drivers simply prefer automatic cars even if they can drive manually.

Automatics can be more fuel efficient depending on your driving style. As well as better fuel economy, they eliminate the need to change gear, providing a smooth driving experience even in high traffic with no need to keep your foot over the clutch pedal. Not to mention making hill starts a breeze.

However, it’s worth noting that automatic cars may be more expensive to finance than manual options.

Why can automatic cars be more expensive to finance?

You’ll likely find that purchasing a manual, as well as insuring it, will tend to be cheaper than purchasing or insuring an automatic.

This is because automatic gearboxes such as continuously variable transmission (CVT) are more complex than manual ones. It requires more sophisticated technology, as the gearbox essentially chooses what gear you’re driving in. You’re just choosing between drive, park and reverse.

As such, automatic gearboxes tend to require more kit – meaning that they’re more expensive to produce, and more expensive to fix too. It also means that automatic vehicles have higher insurance premiums and are more expensive to buy in the first instance.

You’ll likely find that your finance agreement is therefore more expensive too, in order to reflect these costs. This may change over time as automatics become the norm. That’s because electric vehicles don’t need to change gear at all, so there’s no need for a gearbox.

As petrol, diesel and full hybrid cars are phased out, new and used automatic cars will become the norm, which could increase supply in line with demand to reduce costs.

Finance – automatic car options

Despite the higher cost, it’s well worth investigating your finance options if you’re set on cars with automatic gearboxes.

There are three main vehicle finance options, other than paying upfront with cash or via a personal loan. These are personal contract purchase (PCP), hire purchase (HP), and personal contract hire (PCH). All of these different kinds of car financing have advantages, depending on your needs as a driver.

Hire purchase

Hire purchase (HP) is arguably the simplest type of car finance for new and used automatic cars – as well as manual vehicles. The cost of your next car is broken down into monthly payments, plus interest. You then make these payments over the course of the repayment term, which can typically range from 3 to 5 years, until the cost has been paid for in full.

It’s very similar to a conditional sale, except that hire purchase has a small fee when you finish your agreement and purchase the car (rather than upgrading to a different vehicle, for example).

Personal contract purchase

Personal contract purchase (PCP) is another popular option for automatic cars. It’s similar to HP, but with a larger final payment. This is known as a balloon payment, which can be made if you want to buy the car outright.

Alternatively, you can opt out of the final payment and give the car back. In many cases, the money you pay will cover the car’s depreciation over the repayment term, with the balloon payment covering all of the interest (depending on representative APR) or a large portion of it.

Personal contract hire

Also known as leasing, PCH means you pay to use a vehicle for the length of your term. It takes the commitment out of your car search, as you know you’ll be able to switch to a new ride at the end of your deal – whether that’s automatic or manual.

Which is best for you?

Owning outright

One of the main factors when financing your next set of wheels is whether you want to own outright. If you definitely don’t, PCH is the best option, allowing you to continuously switch to your next car and drive newer models. If you definitely do, HP is for you. Alternatively, PCP offers more flexibility with the decision made at the end of your term.

Mileage

Mileage limits are another consideration. These are most common for PCP and PCH agreements to avoid excessive depreciation of the car’s value if you’re handing it back. You’ll need to pay if you exceed mileage limits, with charges per mile agreed as part of your deal.

If you don’t want to worry about mileage, HP may be the most suitable option. However, you’ll still need to check your agreement to make sure you don’t need to pay anything extra.

Availability

However, you may find that your finance provider will only finance an automatic car via one kind of finance deal. Whether or not that deal works for you will depend on your unique circumstances. That’s why it’s worth using a finance broker like My Car Credit, as you’ll be able to get the most competitive deal from our panel of lenders, rather than being restricted to just one.

Secure automatic car finance with My Car Credit

Compared to a manual car, one with an automatic gearbox can provide better fuel economy and an easier drive. With many new cars being automatic, there’s a better range than ever to choose from.

If you’re looking for finance on an automatic vehicle, find out how My Car Credit can help. Whether you want to discuss your finance options or your eligibility for finance, we’re on hand to support you through every step.

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

automatic cars car buying car finance options hire purchase Jan24 PCP

Is There a Maximum Age Limit for Car Finance?

Different car finance providers will have different maximum age limits for their loans, so it’s worth shopping around to find one that will work with your needs and within your life circumstances. The main things that any potential lender will scrutinise are your credit history, your income, and the status of your licence – however, there are still ways of securing car finance even with a poor credit score.

This article details the minimum and maximum age limit for car finance, laying out factors to consider before applying, so that you can go into your car finance search as informed as you can be.

Is there a minimum age limit for car finance?

In order to secure car finance, you need to be a minimum of eighteen years old. It might seem strange that you can pass your driving test and hit the roads at the age of seventeen yet be unable to take out car finance, but there’s a reason for this.

Car finance is a credit agreement – also known as a loan agreement. This is a legally binding contract established and agreed upon by a borrower and a lender. It’s an official document that typically lays out the terms of the loan, as well as details such as the total amount due, your rights as a borrower, any conditions surrounding early repayment, a timetable of expected repayments, and repayment terms.

Credit agreements can only be entered into by those over the age of eighteen. As car finance is a credit agreement, this means that you can only secure it once you hit that age.

At the age of eighteen, you’re unlikely to have built up a substantial credit history. Depending on the car finance provider you’re looking to enter into an agreement with, you may be able to apply for a guarantor loan. This is essentially where someone else with a good credit history – for example, a family member – agrees to pay off your debt in the instance of you being unable to. Be aware, however, that guarantor loans may have a maximum age limit.

Is there a maximum age limit for car finance?

Whether or not you have car finance eligibility varies between providers. Some providers will take retirees and pensioners, as they’ll scrutinise your credit score and history. It really depends on the provider that you’re seeking a car finance deal from.

However, in most cases, the maximum age for car finance eligibility is seventy-five. That said, if you are retired, we will work with you in order to help you find car finance. It’s your credit history that really matters, as well as proof of income. This can come from either a pension, investment or property rental income.

If you are either retired or a pensioner, it’s also worth being aware that any lender with whom you enter into an agreement will likely look to minimise the term of the loan, so as to share any associated risks.

What to consider when applying for car finance

There are ways to make yourself a more appealing candidate for car finance, even if you are close to a provider’s maximum age limit.

Checking your credit report before applying for financing can help you gauge what kind of candidate you might be, which will put you in the driving seat (so to speak) during your search for car finance. Although there are ways to secure car finance with a poor credit rating, you’ll get a better deal if you’re a low-risk borrower.

Having money to put towards a deposit on the car can also make you a more attractive candidate, as it will reduce the total amount that you’re borrowing. It will therefore be more affordable overall, and your monthly repayments will be more manageable. You’re also likely to pay lower overall interest, too.

You’ll experience similar benefits if you opt for a shorter-term car finance contract, too. You may end up paying more with every monthly instalment, but you’ll save on overall interest rates.

See how My Car Credit can help you

We’re happy to work with drivers in different age groups to help you secure your dream car finance. Find out how we can kickstart your car finance journey by emailing our friendly team on 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

age car finance eligibility car finance options considerations Jan24

Car Loan Early Repayment – Is It Worth It?

There are many reasons why people consider paying off their car finance early. But whether you are eligible to do so depends on your personal circumstances, as well as the details of your car finance agreement.

You should expect to pay a settlement fee if you opt for early repayment of your car loan. As such, whether or not early repayment is worth it will vary from person to person, but you do need to think hard about whether you can afford to do so.

What is an ERC?

An ERC (early repayment charge, also known as a settlement figure or resettlement fee) is a penalty charge that you’ll likely have to make if you opt for early repayment of your car loan. This charge typically amounts to two months’ worth of interest, depending on your lender. Whether or not your car finance lender will charge you an ERC, depends on their policies and the type of car finance agreement you have.

Before you decide on an early repayment, it’s essential to know whether you may be liable to pay an ERC, so check with your finance provider first. Once you’ve asked them for this figure, you usually have around 28 days to decide if you want to proceed with the early repayment of your car loan.

How does car loan early repayment impact your credit score?

You may think that making an early repayment of your car loan would improve your credit score, but this isn’t necessarily the case.

If you pay off your car loan early, the account will show as closed within your credit report. It’s only open accounts that have an impact on your credit score, and other lenders sometimes like to see these accounts, so they can gauge how timely you are with repaying your debt. However, once your car finance account is closed, any benefit on your overall finance management won’t be evident on your credit report.

If you need your credit report to work in your favour – for example, if you’re applying for a mortgage or re-mortgaging – then you may be better off keeping your car finance open on your credit report.

Is it worth early repayment of a car loan?

Whether or not the early repayment of your car finance is worth it depends entirely on your situation and the terms of your agreement. You need to ask yourself whether you can truly afford the early repayment or settlement fees, and whether it might be beneficial to stay in the finance deal for the sake of your credit score.

Other factors to consider include whether you’re in negative equity. Essentially, if the settlement figure that you’ll have to make for early termination is higher than the value of the car, it’s probably worth waiting out your car finance term in full until you’re in positive equity.

Similarly, if you’re already close to the end of your finance term, it’s likely cheaper to stick to your current finance deal and finish all of your repayments, rather than face the settlement (ERC) fee.

Returning the vehicle

Another factor to consider if you’re on either HP or PCP finance is whether you want to return the car at the end of the finance term. Under the Consumer Credit Act of 1974, you can opt for ‘voluntary termination’ of the agreement, provided you’ve already paid half the cost of the car or will make up the difference between what you’ve paid and that number. However, if you do so, you won’t be able to return the car to the finance provider – you will be its legal owner.

This may be beneficial if the car’s value is higher than that of your remaining payments, as, once you’ve paid any settlement fee, you can then sell the car on and make a profit. But you may still be charged by your lender if you opt for voluntary termination. This amount is capped by law, but it’s still worth considering. Companies may also react badly to frequent voluntary terminations on your credit file, too.

Discuss your car finance needs today

If you want to get a car finance quote, discuss early repayment of your car loan, or have any further questions about the process, you can email My Car Credit on enquiries@mycarcredit.co.uk 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 options car loan credit score early repayment Jan24

What is CS Car Finance?

When you’re financing a car, it’s important to compare all of your options to find what’s best for you. One of the options available is CS car finance – but not everyone is familiar with what it means and how it works. Read on as we outline what CS car finance is.

CS car finance explained

When it comes to car finance, CS stands for conditional sale – which goes some way to explaining how it works. The sale of the car is dependent on the buyer meeting conditions of their CS agreement.

These agreements are also known (and possibly better known) as hire purchase (HP). Here’s how it works:

The buyer makes monthly repayments towards the cost of their car, plus any pre-agreed interest charged by the lender.
Repayments are made over a course of 1-5 years. A longer term means lower monthly payments, as you’ll be spreading the cost more. However, it also means more interest overall as you’re borrowing for longer.
At the end of the term, you own the car. Unlike PCP, there is no option as to whether you do or don’t buy the car.
That also means there’s no balloon payment – by the end of your term, the car will be fully paid off.
An upfront payment isn’t always necessary, though it will reduce the amount left to pay each month – and, in turn, the amount of interest you pay.
Because you will own the car at the end of the term, there are no charges for damage, excess mileage or depreciation.

Car finance made easy

At My Car Credit, we’re dedicated to making car finance clear, simple and accessible for drivers throughout the UK. That extends from our straightforward explanations of car finance options like CS finance to our hassle-free online application process. Calculate your car loan today to put us to the test.

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 options conditional sale CS Car Finance hire purchase Jan24

Can I Get Car Finance with a Provisional Licence?

Car finance is a popular option for all kinds of drivers, not least those getting their first car. But what about buyers who haven’t actually passed their test? There are lots of people out there who want to buy a car ready for the moment they pass or even learn and take their test in a new set of wheels.

In this post, we’ll explain whether you can get car finance with a provisional licence and the limitations in doing so.

Car finance with a provisional licence

The good news for the people mentioned above is that you can get car finance with a provisional licence. The main requirement is that you’re legally able to drive the car you’re buying.

With a provisional licence, that simply means you need someone with you who is over 21 years old and has held their own full licence for three or more years. Or a qualified driving instructor, of course. It’s also worth noting that you’ll need to be at least 17 years old, even though you can apply for a provisional licence once you reach 15 years and 9 months.

Because you haven’t passed your test (and there’s no guarantee you will), lenders may put some limitations on the kind of car they will help you finance – and how much you can borrow. An upper limit of around £25,000 can be expected, although this depends on affordability.

If you want to increase your chances of success or get more freedom when it comes to your car finance options with a provisional licence, consider the following:

Joint application – You can apply for joint car finance with someone living at the same address.
Guarantor – Getting someone to guarantee your loan will give lenders the reassurance they need.

Talk to our car finance experts

My Car Credit aims to make it easier to get the car you want and need, whatever your circumstances. Check your car finance eligibility online today to get started, and don’t hesitate to contact our team on enquiries@mycarcredit.co.uk if you have any questions.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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How Much Does Car Finance Cost? Check Now!

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

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Refused Car Finance – What to Do Next

Car finance can be a fantastic way to secure the keys to your dream ride. However, it’s not uncommon to be refused the first time around. There are all kinds of reasons why you may have been refused car finance, some easy to overcome and others a little more complicated.

The good news is, there are always options. If you’ve been refused car finance but believe you’re a reliable and worthy borrower, this guide is for you! Read on as we cover everything you need to know about how to deal with a rejected car finance application, what to do next and the steps you need to take to get behind the wheel of a new car.

Step 1: Understanding why you were refused car finance

The first step is to get a better idea of why you were refused car finance. Understandably, most lenders are strict about who they approve for finance. After all, a car finance loan is a big commitment and lenders want to make sure they recoup their investment. Here’s a few of the most common reasons why you may have been refused car finance:

A bad credit score

A bad credit score is one of the most common reasons applicants are refused car finance. Most lenders use consumer credit reporting agencies such as Equifax or TransUnion to assess the suitability of car loan applicants. Equifax issues scores of between 0 and 700, with the average Brit clocking in at around 380. TransUnion rates borrowers on a 0 – 710 scale, with averages in the UK sitting at around 610. Experian is another popular agency and ranks you on a scale of 0 – 999.

Why do you have a low credit score? It’s due to poor credit history. Credit reference agencies keep track of bad credit activity, such as missed payments on utlity bills, outstanding debts on finance or a lack of steady income. Hard searches on your credit file typically display this for up to six years before the date you’re applying.

It’s not always easy to maintain a glowing credit score, as many Brits know. If you’ve ever missed a payment on your credit card, you’re not alone. The latest YouGov research revealed around 15% of UK adults have defaulted on credit card payments, which can knock a decent amount of points off your credit score. The figure is even higher in London, where 19% of credit card holders have missed a payment.

An ambitious budget

In other cases, your budget may be too ambitious for car finance lenders to approve. When assessing your application, lenders will consider personal circumstances, such as your employment status, income and ongoing life expenses to determine if you can afford the loan. If there are any doubts, your application may be refused.

Let’s say you want a hire purchase deal that costs £500 a month and you have regular income of £2,000 from your monthly salary. You might think applying for car finance is a sure-fire thing. But once you factor in mortgage or rent payments, utility bills and other typical outgoings, you might only just have enough left to make the payment to your finance company.

Even with a good credit score, it might be too much. But pair that with a less-than-perfect credit score, and many lenders won’t want to take the risk. As well as risking missed or late payments for themselves, mainstream lenders have to lend responsibly to avoid finance agreements leaving customers worse off. So, without the right affordability, lenders could refuse your car finance.

Incomplete application

Your application doesn’t just offer lenders insight into your borrowing history but also your competency and organisational skills. Incomplete applications can be an instant turnoff for lenders, so it pays to give your documents a thorough once over before hitting send.

When you apply online, it can be tempting to send old documents that are stored on your computer or phone, for example. Maybe you have recently changed address, meaning you’ll need different documents to apply for car finance. That’s often the case for younger customers who have just moved out having passed their driving test!

Finance companies have their own criteria, so every little error could negatively impact your chances of securing that dream car.

Now you have a better idea of why you were refused car finance, let’s take a look at what to do next…

Step 2: Enlisting the help of experts

Car finance can seem complicated but with the help of experts, it doesn’t have to be. At My Car Credit we specialise in getting Brits into the driver’s seat of their ideal car, no matter what their credit score. How do we do it?

A large lending panel

With access to one of the largest lender panels in the country, we take a wide-reaching approach to car finance. Instead of considering just a handful of preferred lenders, we reach out to dozens of finance companies across the country. This drastically improves your chances of being approved for car finance, no matter what your circumstances, borrowing history or credit rating.

If your credit profile doesn’t meet one lender’s criteria, you still have a chance of being approved by one of our other lenders. That’s how we secure finance agreements for young drivers, self-employed applicants and more.

Award-winning technology

We’re part of Evolution Funding, one of the largest and most trusted car finance brokers in the UK. Our service is backed by their award-winning technology, making it faster and easier for us to match your loan application with the right lender.

A personalised approach

There’s no one-size-fits-all approach at My Car Credit. We assess every car finance application individually, meaning you’re matched with the best possible lenders for your unique circumstances. If you’ve had previous rejections due to a poor credit rating, that doesn’t mean you can’t get car finance with us.

For more information, check out our guide on car finance explained.

Step 3: Improve your chances of a car finance agreement

After you’ve developed a good understanding of why you were refused car finance and have enlisted a team of experts to help with your application, it’s time to start improving your chances. Here’s how:

Boost your credit score

There are lots of ways you can boost your credit score, some easy and others requiring a little more time and dedication. Registering on the electoral roll and keeping on top of regular payments such as a credit card repayments or your phone bill are both great ways to improve your credit score. If your credit score is lacking due to a lack of financial history, applying for a basic credit card can be a good way to develop a positive paper trail that establishes you as a reliable borrower.

Pad out your deposit

A small deposit suggests you’re just scrimping by and can be a red flag for lenders. Saving cash where you can and using it to pad out your deposit is a foolproof way to improve your status as a borrower and show lenders you can commit to a regular savings regime.

If you can afford a larger deposit sum upfront, it’s always worth putting it towards your new car. It will reduce the total loan amount, making car finance less of a risk for the lender. It will also reduce your monthly repayments, so you can soon save back the money you added to your deposit.

Securing car finance with poor credit history

Just because you have a less-than-perfect credit history, it doesn’t mean you’re out of the running for a loan. With the right approach, your chances of securing car finance with poor credit are high. If you’re struggling with other barriers such as being self-employed or a lack of credit history, we can help.

At My Car Credit, we understand the difficulties you face with a poor credit rating. Not least that a hard search will stay on your credit file. That’s why we only use a soft search initially to get an idea of your credit profile before moving onto the next steps.

Whatever information we receive from the credit agency, the search won’t appear on your credit report. But even if we find you have bad credit, we can still work to get your application approved if repayments are affordable.

Ready to get the wheels moving on your application? Get in touch by emailing enquiries@mycarcredit.co.uk or give us a call on 01246 458 810 to find out more about how to proceed after being refused car finance.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How to Finance a Car with Poor Credit

Can You Lease a Car with Poor 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

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How to Find Car Finance for Young Drivers

Getting behind the wheel of a car is an exciting milestone for young drivers. Whether it’s a brand-new Ford Fiesta or a second-hand SEAT Ibiza, the sense of freedom that comes with a new car is invigorating. Understandably, many young drivers don’t have the cash to purchase a car outright. This is where car finance for young drivers steps up.

With a strong application, a positive attitude and a good amount of groundwork, you can take advantage of car finance for young drivers and get the keys to your new ride ASAP. Of course, car finance for young drivers does have its challenges. That’s why we’ve put together this guide designed to help you build a strong and attractive application.

Expand your horizons with a large lending panel

When it comes to securing car finance for young drivers, a large lending panel makes a big difference. It’s definitely possible to find car finance as a young driver, but barriers like lack of experience and financial history make it a little harder than usual. Enlisting the help of a broker can be a great way to expand your horizons and expose your application to as many lenders as possible.

One of the first things a broker will assess is eligibility and of course, age is a factor. Can you get car finance at 18? Absolutely. Here’s how a broker can help:

Let a broker do the hard yards

Instead of individually contacting lenders, a broker does all the legwork for you. They have the experience and expertise to match your application with the right lenders and products, thus increasing your chances of success and helping you secure the best interest rates and loan terms on car finance for young drivers.

Contrary to popular belief, many lenders are excited to help young drivers get behind the wheel of their first car. They won’t automatically refuse applications based on age and some even offer products designed especially for young drivers. You just have to know where to look! Once again, this is where a broker comes in.

Brokers are also a fantastic resource as they can help get you up to speed on the different types of car finance for young drivers. There are several different options available in the UK, each with its own unique pros and cons. As a young driver it’s important to understand what you’re signing up for. Brokers can help you navigate the car finance realm and select a product that’s right for you.

Choose an affordable vehicle

Naturally, most lenders will be wary about offering car finance to your drivers eyeing vehicles featuring high-powered V6 engines. Similarly, your chances of securing car finance for young drivers are lower if you’re shopping for a top-of-the-range Jeep 4×4 or luxury model like a Chevrolet Corvette. Even if you have the best intentions, applying for car finance to purchase these sorts of vehicles can imply you’re a high-risk borrower. Keeping your application realistic and down-to-earth will help you win over lenders and find the best car finance deals for young drivers.

Choosing an affordable vehicle not only boosts your chances of being approved for car finance but can also slash the cost of insurance. Most young drivers are hit with big premiums during their first year of driving, with many paying more than £2,000. As a young driver, it’s worth considering models that are cheap to insure. This includes popular cars like the zippy Hyundai i20 and the much-loved Fiat Panda. Want to know more? Don’t miss our roundup of the 10 cheapest cars to insure for young drivers.

Consider ‘black box’ insurance

As well as bringing down your premiums, ‘black box’ car insurance can be a great way to win over lenders. Also known as telematics, this type of insurance policy sees a black box installed in your car. It uses GPS to collect data on your driving behaviours, including things like speed, mileage, braking habits and the time of day you get behind the wheel. This data is used to assess your driving style and calculate a premium, ideally less than the blanket policies offered to other young drivers.

Ultimately, motorists who drive safely and responsibly are rewarded with lower premiums. Black box insurance can also help show lenders you’re committed to being a conscientious, low-risk driver.

Take advantage of young driver incentives

While car finance for young drivers does have its challenges there are also some great perks and incentives out there. Some dealerships offer student-friendly incentives while others attract young drivers with special rebates. You may also be eligible for discounts on your insurance premium, gifts such as retail vouchers and cashback schemes.

Shopping around for these deals can be tricky, which is where a broker can help. They’ll assess your application and match you with lenders who are most likely to approve your loan and ideally, offer you some great perks.

Tips to boost your credit score as a young driver

Lack of financial history is one of the biggest barriers young drivers face when applying for car finance. Below, we cover some quick and easy ways you can build a borrowing history and boost your credit score. In a matter of months, you can drastically improve your chances of securing car finance for young drivers.

Apply for a low-limit credit card

Many banks offer low-limit credit cards designed with students and young people in mind. Applying for one of these products can be a great way to build your credit history, as long as you use it responsibly and pay off your debt every month.

Pay off any existing credit card balances

If you already have a credit card with a significant balance, doing everything you can to pay it off is a guaranteed way to improve your credit rating.

Set up direct debits for bills

Rather than topping up your phone on a pay-as-you-go basis, consider setting up a direct debit. This helps pad out your credit history and shows lenders you’re capable of committing to regular monthly payments.

Car finance made easy for young drivers

Whether you’ve passed first-time in your late teens or you’re a twenty-something ready to upgrade your car, My Car Credit aims to make it easy to find car finance for young drivers from all backgrounds. Ready to get your application rolling? Reach out to our team by email on enquiries@mycarcredit.co.uk or give us a call on 01246 458 810 to find out more car finance for young drivers.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

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Car Finance for First Time Drivers: A Beginner’s Guide

Can You Pay Monthly for a Used Car?

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

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How to Finance a Car in 4 Easy Steps

Car finance is growing in popularity in the UK. In fact, the Finance & Leasing Association (FLA) recently announced that consumer car finance has increased by 39% from February 2021 to February 2022.

Why? Car finance is an affordable, accessible way of purchasing a new or nearly new vehicle. There are various kinds of car finance available, depending on the circumstances of the buyer, and many lenders will now work to provide car finance to those with a poor credit rating.

If you’re new to the car finance world, you may be wondering how to actually finance a car. This article is here to help you gauge what to look for when considering car finance, helping you to stay in the driving seat.

How to finance a car: 4 steps

Establish your priorities

There’s no ‘one size fits all’ approach – different kinds of car finance will suit different people differently! One of the best ways to work out which type of car finance would suit you is by asking yourself key questions.

Are you looking for a new or nearly-new vehicle? Would you prefer to own your car at the end of your car finance deal, or will you plan to sell it? What kind of credit score are you working with? Can you work with mileage and other usage caps?

Once you’ve got an idea of the answers, you’ll be better able to tailor your car finance search.

Ask yourself what you can afford

Remember, car finance can be made up of different kinds of payment, depending on which finance option you opt for (more on that later). You need to ascertain what you’re able to afford, so that you can choose a deal that suits you.

You may prefer higher monthly repayments and a shorter term or lower deposit, or favour things the other way around. If you want to purchase the car at the end of the finance term, you’ll need to factor in this one-off payment. Remember, if you opt for a finance term with mileage or other limits, you may face penalties if you exceed these.

Your credit score will play a significant role in the kind of car finance you can secure. Higher credit scores tend to result in lower interest rates and better deals, but plenty of car finance providers can still work with you if you have a poor credit score – just be sure to determine who these are from the beginnings of your search.

Decide which car finance is for you

There are different kinds of car finance – your perfect deal depends on your needs. The most common are car loans, personal contract purchase, hire purchase, and personal contract hire. All of them involve making affordable monthly repayments over a pre-determined period of time, alongside interest.

We’ve written plenty about the pros and cons of these different kinds of car finance elsewhere – just browse the hundreds of helpful blogs and articles that we’ve compiled – but a quick summary goes as follows:

Car loans are like a personal loan, making them more expensive and better for those with good credit scores, but you will own the car from the get-go.
Personal contract purchase is a flexible option and you can opt to purchase the car at the end of the finance term.
At the end of hire purchase, you’ll automatically own the car and you’re paying less interest, but your monthly repayments are higher.
Personal contract hire is essentially a long-term rental with mileage caps but lower monthly repayments.

Reach out to car finance providers

Now that you know what kind of car finance terms you’re looking for, you can reach out to car finance providers, many of whom will have an online application process to determine whether you’re suitable for car finance.

At My Car Credit, we make things easier by comparing deals across our large network of trusted lenders. You’ll get a no-obligation quote within minutes with simple, straightforward online applications. You just tell us about yourself and your priorities, and we’ll use our unique technology and stellar network with the best lenders to find the right car finance deal for your circumstances.

Car finance made easy

Don’t panic if you still have questions about how to finance a car – My Car Credit’s friendly team of specialist advisors are available to answer any questions that you may have.

We aim to take the stress out of the search, so get in touch today on 01246 458 810 or email enquiries@mycarcredit.co.uk.

Rates from 9.9% APR. Representative APR 10.9%

Evolution Funding Ltd T/A My Car Credit

How Does Car Finance Work in the UK?

How Long Does It Take to Buy a Car?

Check for car finance without affecting your credit score

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

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Shopping for a new car is exciting. From choosing the make and model you like through to deciding on accessories and design features, finding a new car is serious fun. But financing that purchase might be a different matter.

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There are a number of benefits to automatic cars. From fuel efficiency and ease of use through to being more comfortable to drive during stop-start journeys in urban centres, there’s a reason why people opt for automatic vehicles. But can you secure car finance on an automatic car?

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