Who needs the bank manager?
The days of visiting the bank manager to secure a car loan are long gone. In the 21st Century financial decisions are made in a much more scientific manner rather than just on the decision of one person. Today, lenders prefer the individual credit score method. How we use our money is a matter of risk and responsibility that’s down to us.
In 2015, the percentage of people who financed a car purchase rose from 45% to 75% thanks to new ways of buying a car. It’s the modern way.
Justin Basini, CEO at ClearScore.com had this to say, “Car finance deals are more popular than ever and can be a great way to make your dream car affordable. One way to improve the deal you’re offered is to choose the car you want a few months in advance and work hard on improving your credit score before applying for finance. A high score can reduce the cost significantly”.
How It Works
Credit scoring works by utilising a set of factors. This way lenders can determine how an individual has conducted their financial affairs over a period of time. If an individual prefers not to borrow and likes to stay within their means, that’s okay but it gives no indication that they understand the ramifications and difficulties of debt.
Conversely, a person who regularly uses credit cards or other finance options, manages their money well and makes repayments on time will be seen as a good risk and thus worth lending to at relatively low rates of interest.
Sometimes though, life doesn’t always work out for the best and we find ourselves with money problems. These days it may still be possible to obtain finance but the extra risk of a previously shaky credit history will likely mean that a deal will be offered at a higher rate of interest.
So You Want To Buy a Car
Recently, Top Gear magazine suggested the cars that would more than likely be best sellers in 2017. The Mazda CX-5, which costs approximately £23,000 is on the list. An individual with an excellent credit score who put down 10% on a five year loan at an APR of 5.9% to buy this motor would buy something in the order of £4131 in interest over the period.
If the same buyer had instead a poor credit history he or she could expect, for the same car, an APR of 31.6% meaning a final interest figure of an immense £21,616. That inflates the price of the motor to a senseless degree.
There Is A Better Way
Plan ahead. Do the due diligence as a first step and that first step should be to approach a professional credit reference agencylike ClearScore who will provide a free-forever easy to access a credit score.
If you’ve got a high score then great; proceed with confidence. If however you have a low score then proceed with caution. To get the best deal you can, first you have to work to help yourself. Consult the credit reference agency to understand how to clear up anything that might be having a negative effect on your financial history. They are there to help advise and help you to help yourself.
The Right Car Deal At The Right Time
In the retail car industry the dealers usually have quarterly targets to meet and the month ends of March, June, September and December are often the time when the trade is keen to offer better rates to improve their sales performance.
Check out car magazines who will often suggest ‘target prices’ which, can often be achieved with a bit of hard negotiating. Alternatively, try one of the online car brokers who often have some striking deals - if you are not over fussy about this or that specific option.
For example, manual cars usually cost less than autos. A customer who is prepared to accept a vehicle that has already been bought in on spec and registered in advance will almost certainly pay less and have the advantage of getting that new car in a matter of days instead of weeks or months.
Go With The Flow
Around seventy to eighty percent of car buyers purchase on credit. The higher your credit score the better the finance deal will be. It serves no purpose to try and cut corners and it definitely isn’t an advantage to ignore the issue.
Being credit assessed over the internet may seem a bit remote and sometimes it may even seem a little unfair but that is how the finance industry works these days so the solution is to go with the flow. A good credit reference agency could make the difference of a large sum of money on the price of that much desired new car!