If you’ve been looking for local vehicle finance, and searching for a ‘car loan near me’, you may be surprised to learn that these days, you don’t need to shop locally. As the majority of lenders now conduct business online, you should be able to find a suitable vehicle finance provider that’s operating anywhere in the UK.
So with so many lenders out there, how do you choose the best one for your circumstances? And does the eligibility criteria differ from lender to lender? We’ve explored these questions, and vehicle finance in general, in more detail below.
What is Vehicle Finance?
Vehicle finance is a type of secured loan, which allows you to spread the cost of a vehicle over a few years, rather than pay as a lump sum. When we talk about secured loans, this means that the money is secured against a valuable asset, which in this case would be your vehicle. There is therefore less risk for the lender, but it does mean that if you were to default on the loan, the finance provider would have the option of repossessing the vehicle.
Secured loans are generally more accessible though, and can come with lower interest rates than unsecured loans. So if you’re confident that you’ll be able to comfortably afford the repayments, a secured vehicle finance loan may be a great option.
It’s furthermore important to note that vehicle finance isn’t just for new cars. You can also get finance on second-hand vehicles. So even if you don’t feel like you can afford a brand new, top-of-the-range vehicle, there should still be options available.
What Are the Eligibility Requirements for Vehicle Finance?
There are a few main eligibility criteria you’ll need to meet in order to apply for vehicle finance. Most lenders ask that you’re aged 21 or above, and have either a full or provisional driving licence. You’ll also need to be a UK resident, and may have to provide proof of address.
Other considerations include things like your monthly budget. It’s a good idea to go through your income and expenditure, and see roughly how much disposable income you have each month. That way you can ensure that the loan will be affordable, and you can demonstrate this to the lender when you make an application.
Your credit rating is also something that a finance provider will look into when making a loan decision. Your credit history can not only affect your chances of approval, it can also help determine the interest rate you’re offered. You may therefore wish to see if you can boost your credit score before applying for vehicle finance – you can check your rating and find tips on how to improve it via the Credit Karma website.
What Details Will the Lender Request?
When you fill in an application for car finance, you’ll obviously be asked for details of the loan you’re applying for, as well as some personal information. But there are also three main things you’ll need to provide in terms of documentation. We’ve outlined these below:
- Proof of Identity: It will come as no surprise that you’ll need some form of ID when applying for a loan. Generally, this would be your passport or driving licence
- Proof of Address: As most lenders require you to be living in the UK, you may have to provide some form of address history. This may only be for the last six months, or could be for the last three years or so
- Proof of Income: To show that you have a regular income, and are able to afford the repayments, you’ll most likely need to provide your payslips from the last three months
You may also be asked to provide other documents, especially if you’re self-employed. For instance, you could have to send across recent bank statements, or even an annual tax return. It may be worth speaking to the lender, or looking at their website, before making an application, to ensure that you have all the correct information to hand.
Can You Get Car Finance for Bad Credit?
As mentioned above, vehicle finance is a form of secured credit. This means that even if you have a low credit score, you may still be eligible for a car loan, as your vehicle acts as collateral. There are also specialist lenders for bad credit, who will take more than just your credit history into account when making a loan decision.
Often a poor credit rating will be due to factors outside your control. For example, if you’ve not borrowed much money previously, and creditors can’t see how you manage your money, this can lower your credit score. That’s why many loan providers look at your affordability too, such as your income and expenditure.
If you don’t think you’d be eligible for vehicle finance, the only option is to buy a car outright. Unfortunately not everyone is in a position to do this, as you’d need to have a lot of money saved up already. Though it would guarantee no interest!
Buying Long Distance
With a lender, it doesn’t really matter where they’re located in the UK. But you may need to think about where your vehicle is coming from. Although some dealers will offer a home delivery service, this isn’t something that’s always provided, so you might have to pick up the vehicle yourself.
Buying long distance may also mean you’re unable to see your new set of wheels in person. This can be a major concern, especially if you don’t know much about the dealer. The best thing to do is research the dealership, and try to find independent reviews. That way you can rest assured that the dealer is trustworthy.
Overall, it can be just as easy to buy a car that’s miles away as it is to purchase one from a local dealership. As long as you do some research first, and perhaps speak to an expert, you’re bound to be behind the wheel of a great new car in no time!
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