Today’s article is from James Dywer, the content marketing manager at Creditplus car finance.
Car finance is becoming an increasingly attractive purchase method, with more options and protection available than ever before. Recent changes by the Financial Conduct Authority (FCA) mean that car finance companies and providers have to put more focus on customer satisfaction and ethical lending.
So how can you, as a consumer, take advantage of the added protection available? The good news is that the focus on providing consumers with all the information they need to make an informed choice on their car finance means that there are more resources and tools available to help you decide whether car finance is right for you.
Car Finance Tools
Using a car finance calculator is an excellent way to get an idea of whether or not car finance is suitable for your circumstances. Take the Creditplus car finance calculator below, that requires a few basic details in order to give an accurate idea of how much your car finance deal would cost.
An important thing to bear in mind when applying for car finance is your credit rating. In order to get the most accurate reading, you will need to know which rating describes your credit file. There are a number of credit check companies online that can provide an analysis of your credit report. Some are free, some are paid, so you will want to research the different options before choosing which company to use.
Once you have your credit rating, you can then use a calculator to work out the cost of your car finance agreement. All you need is the amount you wish to borrow, the length of time you want the agreement to last, and the amount of deposit you have available. In general, a longer agreement with a higher deposit will give you the lowest monthly payments.
If you are concerned about your credit rating, you may still be able to find a car finance package. There are specialist lenders on the market that can cater to all credit circumstances, so you should be able to find a finance provider that can help.
There are a number of comparison sites that now compare car finance options for you. This varies between a more general comparison site that will compare personal loans, car finance provides and car finance brokers for you. The other is a car finance broker, who will find the best car finance deal for you.
One thing to be aware of when using a comparison site is the method in which they compare deals for you. In some cases, they will compare deals by applying to a number of different companies until you receive an acceptance. This can have a very negative affect on your credit rating, as finance companies look at the number of searches a potential customer undertakes when analysing their application. They can see you as being “desperate” for credit, and so perhaps not the most reliable potential customer.
You can avoid this by choosing a company that performs a “soft credit search”. This means that when they look at your credit file, it does not leave a “footprint”, i.e. a sign that your credit file has been looked at. This allows a car finance broker, such as Creditplus, to look at your file and see which lender is suited to you. This helps in a number of ways: 1) It doesn’t affect your credit file. 2) It lets you compare different finance packages to find a good deal.
Ethical lending will become more prominent over the coming years, especially as the FCA pushes companies towards best possible customer experience. However, you do not have to wait to take advantage of soft credit searches.
Car finance companies also have to provide a 14 day money back guarantee. From the moment you sign the finance agreement, you have up to 14 days to cancel and not be penalised. Before you sign any agreement, the car finance company should provide you with a SECCI form that breaks down every single cost and payment incurred during the length of the finance agreement. If the finance company does not provide this to you, then you should not proceed with the agreement.
Car finance overview
If you approach it right, car finance can be an affordable way to fund the purchase of a used car. Spreading the cost across monthly payments can help consumer’s purchase a more expensive car then originally planned. Using car finance tools such as the calculator to work out the cost of a finance package in advance can help you to plan the purchase of a new car in more detail. Ethical lending means you are also more protected more than ever before. So if you haven’t considered car finance, it might be worth a look.
About the author
James Dwyer is head blogger for Creditplus. With 12 years experience in the car finance industry, we have established ourselves on our commitment to ethical lending and providing our customers with the information they need to make an informed decision on their car finance options.
The Used Car Guy