Denied Car Finance
Car Finance Declined?
Buying a car may well be one of the most expensive purchases you ever make after buying a home so given the amount of money involved in buying a car it is important to be fully aware of the types of car finance available to help your purchase of a vehicle.
If you don’t have the money to pay for a new or second hand car, you will want to look at the various financing options and choose the type of finance that best suits your position.
Types of car finance
Hire purchase (HP) – A hire purchase agreement is finance that is arranged by the car dealer and is paid at an agreed monthly rate (less the deposit) until the full price of the car is repaid. The dealer will arrange the HP deal with a motor finance company which will be the party that the applicant will pay. It is worth noting that the customer does not own the car until the final arranged payment has been paid.
Personal contract purchase (PCP) – A PCP allows a customer to pay a deposit on the chosen car and pay smaller monthly payments (than an HP) towards the vehicle based upon pre-agreed forecasted mileage levels. At the end of the term you will have three options open to you; the car can be handed back to the car dealership with no further payments due, the car can be traded in and another PCP can be taken out, or a final payment (that was calculated at the start of the agreement) could be paid that would secure ownership of the car outright for the customer.
Personal leasing (also called personal contact hire) – Personal leasing involves paying the car dealer a fixed amount per month which will include all servicing and maintenance on the car (provided that the car mileage stays within a pre-agreed level). At the end of the agreement the car will be handed over to the car dealership – it will never be owned by the customer.
Personal loan – If your credit rating is good, you could consider taking out a personal loan to cover the cost of a car purchase. These can be obtained from any bank or building society and they can also be arranged over the phone or Internet. You will likely have more choice in terms of the loan product if you choose this option, but an HP agreement is typically quicker as the work is done by the motor finance company on your behalf as you wait in the car dealership.
All four of the car finance options have their merits and can be perfectly viable options depending on the applicant’s specific situation.
Reasons for car finance being denied
There are a range of reasons as to why an application for car finance could have been declined. The most important thing to do if your application has been denied is to find out the reason why. Once you know the reason, you can start to take steps to rectify the situation so that future attempts at credit are not also declined.
Common reasons for car finance to be declined are:
A lack of credit history or poor credit history – There are a number of ways that you can go about fixing your credit rating or adding to your credit rating which are detailed in our credit section
Lack of a full driving licence – This may seem obvious, but if you are applying for car finance you would need to have a current and valid full driving licence. If you have not passed your driving test or you have been disqualified from driving then you can expect to be denied car finance.
Employment status – If you are applying for car finance and you are unemployed or working part time you may have you car finance application declined. Many lenders require a person to be working full time and show evidence of having a regular income.
Type of car – The type of car which you applying for car finance for can have a bearing on whether you are accepted for credit. It should not come as a surprise for example if you are declined finance for a new Ferrari! Try to be as realistic as possible when it comes to the type and age of car that you would like to seek finance for.
Age – Your age can be a factor when applying for car finance. In the eyes of some lenders an applicant that is deemed to be either too young or too old can be a reason for declining an application for credit.
Car Finance Companies
If you are considering applying for car finance the following companies specialise in offering finance for car purchases.
Get a car finance loan from Get Me Car Finance.
Click to check the current loan rates.
Get a car finance loan from Zuto.
Click to check the current loan rates.