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Ask people why they haven’t applied for car finance, and a common answer is: “I don’t think I’d get accepted.”
Some haven’t been turned down or offered terms they couldn’t accept. They’ve assumed the answer will be no, so they haven’t checked. That assumption can come at a cost if it leads to a rushed decision or rules out an option that might have suited them.
This guide from carloans 365, a UK credit broker, explains why a credit score isn’t necessarily the whole picture and how drivers can get an indication of where they stand before proceeding with a full finance application.
Your credit score isn’t the full story
A credit score is useful, but lenders usually consider other information, too. They may look at your credit history, income, existing commitments and whether the proposed repayments are affordable.
For example, a score alone may not explain the circumstances behind an older missed payment or show the full picture of a self-employed applicant’s income. Someone who has recently moved to the UK may also have a limited credit history.
Different lenders typically have different criteria. A lower score may mean fewer options or different terms, including a higher APR, but it does not automatically mean every application will be refused.
Three concerns that may be worth addressing before you decide:
- A low score means there are no options. It may limit your options, but lender criteria varies. Approval remains subject to status and affordability.
- You have to accept whatever you are offered. You can review the APR, monthly repayments, agreement length and total amount repayable before deciding whether an offer suits you.
- Checking will damage a credit score. An initial eligibility check that uses a soft search should not affect your credit score. A hard search may follow if you decide to proceed with a finance offer.
Three things that may help when checking car finance options
These considerations may be useful regardless of which broker or lender you choose.
1. A clear explanation of the eligibility check
A soft-search eligibility check can give you an indication of whether finance may be available without affecting your credit score. The search may appear on your own credit file, but it is not visible to other lenders.
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It is not a finance offer, a guarantee of approval or an affordability assessment. If you choose to proceed, a lender will likely carry out further checks, including a hard credit search, before a finance agreement is finalised.
Carloans 365 says its initial check takes around a minute and uses soft searches. If it is unclear what type of search another provider will carry out, ask before entering your details.
2. An explanation of the lender options available
Carloans365 works with a panel of lenders, including lenders that consider applications from people with poor credit or more complex circumstances. A broker may be able to identify lenders whose criteria fit your situation, but its panel is limited to the lenders it works with.
Ask which options are available to you and compare the terms of any offer. The lender makes the final decision, and approval is subject to status and affordability.
3. An explanation of how a broker may be paid
Carloans 365 is a credit broker, not a lender. It introduces customers to finance providers and may receive commission for those introductions. According to its published disclosure, commission may be a fixed payment or a percentage of the amount borrowed, and details are available on request.
Useful questions for brokers can include: Are you a broker or a lender? Which lenders do you work with? How are you paid? Can you explain the commission on the proposed agreement?
Before you decide
An assumption about your credit score doesn’t have to make the decision for you. A soft-search eligibility check can help you understand whether finance may be available. If you receive an offer, take time to consider the APR, total amount repayable and whether the monthly payments fit your budget.
For more information, visit carloans 365
Finance is subject to status and affordability. carloans 365 is a trading style of HT Finance Ltd and is a credit broker, not a lender. It may receive commission from the lenders and finance providers it introduces customers to. HT Finance Ltd is authorised and regulated by the Financial Conduct Authority, reference number 821383. Carloans 365 company disclosure
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