There are times in our lives when we have to purchase something that isn’t always immediately affordable. For example a car or a house. For a house we can get a mortgage as a rule and for a car we tend to find get a car loan or some form of car finance. These are tough economic times though and getting credit isn’t always as easy as it could be. Banks are reluctant to lend people money and so even if you know you can repay the money you still might find yourself struggling to get a loan.
If we take the example of car credit, there are several things you should consider before applying for credit. Do you want to get car finance through the dealership or would a personal car loan be more appropriate? There a great deal of money lenders who will lend you money to finance your car purchase but make sure you do your research before applying for credit with them.
Know your limits
First of all work out what you can afford each month and be realistic. There is no point in getting car finance only to find you can’t afford to repay it and end up losing the car. Don’t forget to take into account the unexpected expenses that can arise each month such as a vets bill or car repair.
Know your credit history
Secondly, make sure you know your credit history before you apply for car credit. You can get a copy of your credit score online and it will show you how much the banks think they can take a risk with you. A high credit score will give you access to the better car loan interest rates but a poor credit score will restrict what you will be offered, if anything. It will certainly mean you will pay a higher monthly repayment because the bank will feel you are more of a risk to lend to.
Decide for a car credit provider
Decide where you want to get the car credit from. You might apply to your high street bank for a car loan or the dealership where you buy your car from might be able to give you car finance as well as other incentives for buying a car from them. Some car finance packages require no deposit and offer 0% interest rates too. Always make sure you check out their APR vs. Flat Rate. These are two very different things and you could end up paying lots more for your car credit if you don’t do your sums correctly.
There are a lot of car finance packages available but make sure you shop around for the best deal and know your credit score before you buy.
This post was written by Riley Lambert in association with Concept Car Credit. Image from Stock.XCHNG.