In the UK over 60% of car buyers bought a used car on finance. It is critical to understand what a bank requires before financing a certain car to you. The credit score is the first thing a bank checks before financing a vehicle.
There are a variety of car finance products available, but the application and check process remains the same for each. In the following list, we list the different types of generally administered checks.
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Proof of identity and personal information
You must have identity evidence in order to obtain vehicle financing. These may be demonstrated by presenting your driver’s licence or passport together with the application documents. Read the forms carefully to determine which sort of identity evidence is best.
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Driver License
Lenders will presume you have a valid driver’s licence because you’re looking for car finance. If an application is missing one, most lenders will immediately reject it. Finance businesses may also call the DVLA to verify your driver’s license’s legitimacy.
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Address proof
Many financial organisations want verification of your present address as well as proof of your previous addresses (sometimes up to 3 years). It is done to guarantee that you can be located if you fail to make any monthly payments. You should be worried if your address history is irregular.
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Income Proof
A lender may want evidence of income to guarantee that you can afford to pay your monthly premiums. Most providers will take bank statements for three months in a row, while others may want copies of your paystubs as well as information from your job.
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Credit score
The lender determines whether to grant your loan depending on your credit score. Your credit report is thoroughly reviewed by your bank or lender. A low credit score suggests that the borrower may be unable to repay the loan, whereas a high credit score implies that the borrower will be able to make regular repayments. As a result, it is preferable to obtain a credit check.
Decide how you want to finance a car?
You must first have a decent credit score in order to purchase a car through a financial institution. If you have a good credit score, it is time to think about how you want to finance. There are several options to meet the demands of various people.
Determine which one is best for you:
- Personal Loan – Your best bet is a personal loan with a good credit score.
- Hire Purchase – Pay 10% of the car value and agree on fixed monthly payments.
- Personal Contract Purchase – It works like Hire Purchase but gives you more freedom at the end of the contract.
Read more: Types of Used car finance deals explained
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 car.
Conclusion:
If you have enough money or documentation to pay your installments, you must provide certain information. It contains personal and employment information and history, bank information. However, you should be aware that each bank has its unique set of rules and processes for financing a car. Let’s look at what information that banks required.
