Guaranteed Car Finance – Scam Awareness

What is guaranteed car finance?

Guaranteed car finance is a phrase that is sometimes used by finance companies to entice people to apply. However, it can’t be guaranteed as lenders have to consider credit score before approving finance. After all, they need to be sure that the borrower can pay back the loan. 
Guaranteed car finance sounds too good to be true – and it is. There is no guarantee that you will be accepted. Not only it’s unethical for car finance companies to advertise to people who experience financial difficulties, but it is also against the Financial Conduct Authority rules. So the next time you see guaranteed car finance claims, be wary because it’s 100% scam as there is no guarantee that you can be accepted by default, without any credit checks.

Bad Credit Car Finance

That’s where bad credit car finance comes into play. Although it’s impossible to get guaranteed car finance, some companies specialize in securing loans for those with bad credit . You can check your credit score via two major credit companies Experian and Equifax for free. Those with bad credit can still apply despite CCJ judgments, Individual Voluntary Arrangements (IVA) and defaults.

How to improve the credit score

Luckily, there are numerous ways to improve your credit score, whether you have bad or no credit history at all. 

Register to vote 

If you show up on an electoral roll it’s easier for credit companies to find your basic information, such as name and address. This means a significant amount of time can be saved since you won’t have to provide additional proof of address or ID that can delay the application for car finance. 

Pay your loans back on time

Creditors check your file, and if you consistently spend more than earn – it’s a red flag for them. Therefore, if you have a loan, paying it back on time can have a positive impact on your credit score. Even if you can’t afford to pay the full installment, it’s better to pay what you can than not at all. 

Build up your credit score

If you have no credit history, it may be difficult to get car finance. Taking out credit on simple services and products, such as a mobile phone contract or shop credit card can help with improving the credit rating (granted you pay it back each month, in full). The easiest way is to set up a direct debit so that you don’t forget any loans that need to be paid. It takes up to 6 months to build up the credit score though, so have patience.
And here are some of the most frequently asked questions about car finance:

Is it possible to get car finance if I’m self-employed?

It is possible; however, it may be difficult to prove your financial situation without having a fixed monthly income. It is advisable to use credit referencing companies to check information about your credit score. If you see something that isn’t quite right like mistakes or inconsistencies – report back to the agency to fix it.

Can I get a loan through someone else (guarantor)? 

Yes, there are a variety of companies that provide car finance through guarantors, they can be family or even friends. However, certain requirements need to be met:
  • Be over 18 years old. 
  • Have a good credit rating.
  • Able to cover the payments in case you’re not able. 

How does car finance work?

There are a lot of options when it comes to car finance – from Personal Contract Purchase to personal loans and leasing deals. Firstly, define your goal – do you want to own the car by the end of the agreement or exchange it for a new one? Once you sort this out, you’ll need to commit and pay each month towards your new car. 
And here you have it, hopefully, we’ve dispelled some myths about guaranteed car finance and bad credit. Let us know in the comments down below, did you ever consider taking out guaranteed car finance? How did it go?

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