As most cars in the UK are bought on finance, it is vital to understand what a bank demands before financing a particular car to you. The first thing a bank sees before they finance a car is the credit score. If you have enough money or proof to pay your installments, then only they ask for certain information from you. This includes your details, employment details and history, bank details, and identification documents like driver’s license, proof of address, and proof of income. However, you must know that every bank has its own rules and procedures to finance a car. Does a bank want a car history check before the approval?
The simple answer is ‘No’. As a buyer, you are responsible for getting a vehicle history check as well as certain other checks.
Once you are at the seller’s place or dealership to check the vehicle, make sure it is according to the specifications the seller advertised. The seller must be honest about the make, model, engine specification, and flaws. It is wise to hire a mechanic or a car inspection company for examination to save yourself the troubles down the road. After you are satisfied, the car is mechanically and physically fit, carry a free car check.
Reliable used vehicle dealers often offer car history check reports themselves. Still, we advise you to perform a full car check yourself and know if it has outstanding finance, is written-off, has a mileage discrepancy, or any other anomaly. It will cost you a little, but knowing about outstanding finance and other car checks will be worth every penny. Once you have the car history check report in front of you, cross-reference it with the car’s V5 registration document. If any information in the record does not correspond to the car history check report, you should walk away from the deal.
Once satisfied with the cross-checking, it is time to visit the bank. Let’s take a look at what are your obligations before you go to a bank for financing.
Decide How You Want to Finance a Car
To buy a car through a financial institution, you first need to make sure you have a good credit score. If you have an outstanding credit record, it is time to decide how you want to finance. There are multiple alternatives to suit the needs of different people. Find out which one is appropriate for you:
With a good credit score, your best bet is a personal loan. You borrow the money, pay to a dealer or a private seller, and get the car. You can spread the cost from one to seven years; however, the monthly repayments will be higher than the other choices.
Pay 10% of the car value and agree on fixed monthly payments. Although you do not own the car, you get certain consumer rights. You can return the car if you have paid half of the money for the car. If you fail to finance/pay the installments on time, you could lose the car.
Personal Contract Purchase (PCP)
It works like Hire Purchase but gives you more freedom at the end of the contract. You can do any of these as the deal finalizes; return the car, make the balloon payment and retain the vehicle, or use the resale value for purchasing the new vehicle.
Apart from these finance methods, you can go for Personal Contract Hire (PCH), buy a car on a credit card, or use a peer-to-peer loan.