While you may be excited to drive your first car, getting a car finance can be exhausting. Car finance is a facility that individuals seeking to buy a car can tap into. It helps Individuals Bridge or finance the car purchase costs. Individuals with good and poor credit histories can use it. However, the interest rates, terms, and other costs may impact the overall amount that you get.
It may vary as first-timers have a low credit history. It is because they are university pass-outs or graduates seeking their car. It helps them commute to the university and attend other essential functions without hiring cabs every time. It is the reason first-time car finance seekers struggle to get quick finance quotes.
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However, don’t worry. The blog lists the best ways that may help you get car finance as a first-time driver.
6 Ways to finance a car with a bad credit score as a first-time buyer
Though it is challenging to grab an affordable car finance quote as a first-time buyer, you can try the following tips. These are expert tips that may help you finance your car hassle-free. However, be cautious of a few things. Let’s know all:
1) Determine your budget
It is the first that you decide before buying your first car. Unless you have a definite budget, you cannot buy a car successfully. Do so by analysing your income, savings, liabilities, and the car you want to buy. The specifications you need in a car will help you decide on the right car.
Once you know the car and the price, identify how much you need as finance to get the car. Determine the ways to collect the deposit before applying for car finance. It is essential as you must provide at least 20% of the car’s price as a deposit.
2) Improve your credit score
Your credit score is another important factor that decides the loan approval. Thus, before applying for car finance, analyse the credit delinquencies. It is crucial as you apply for the finance for a low credit history.
Lenders or car finance providers analyse the credit score before approval. It helps them know the affordability and whether the person could pay back the sum he borrows.
It is the reason why it is important to update your credit score. You may fetch low interest rates if your credit report reveals responsible financial management.
3) Save for the deposit at least a year before
As mentioned above, providing a higher deposit limits your liabilities toward finance payments for car. It also helps you get low-interest rates. It is one of the best ways to finance a car in a significantly affordable way. For this, identify your existing income and the amount you want to save. Additionally, check on the aspects or expenses that you can cut. It will help you save more on the opposite side.
Providing a higher deposit in case of bad credit improves your chances of getting car finance for a bad credit score. Otherwise, lenders conduct checks to draw out the possibilities of approval. It is a feasible option for individuals with a good earning bracket.
4) Check Pre-approval for negotiation
Pre-approval is ideal for individuals applying for car finance for the very first time. First, it helps you know about the current and approximate rates. Secondly, it enables you to understand whether you can qualify for this finance quote. You can also analyse whether you can pay the loan back comfortably or not.
The best part about pre-qualification is that it does not impact your credit score. Moreover, explore the best options and pre-qualify. However, be conscious of the fact that it must not impact your credit score.
Once you get the desired loan quote after pre-qualification, move ahead. Negotiate the quote further with the lender to suit your finances well. He may agree if your recent financial performance has been satisfactory.
It implies- if your credit profile reveals some paid debts and well-managed utility and credit card bills for at least 6 months, the lender may negotiate. It may help you qualify for more amount without paying extra.
5) Get a co-signer or a guarantor on the loan
If you have been trying to get a finance quote for car, but certain loans like- student loans, payday loans, and credit cards consistently impact your credit history, a co-signer may help. You can co-sign the finance agreement with someone who has a healthy credit history. It will help you qualify quickly and with a better rate. However, co-signing implies that both parties will be equally responsible for the car finance payments.
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Alternatively, you can also check out a guarantor. A guarantor is also someone close that may help you qualify for car finances. The lender analyses the credit history, income, and driving history of the guarantor before approval.
However, he is not equally responsible for the payment. He comes into the scenario only if the agreed borrower cannot carry payments anymore. The guarantor is responsible for clearing the remaining payments until the loan term.
6) Borrow a low amount for car purchase
Identify your affordability and borrow an amount that you can comfortably repay. For example, if you earn €60000/month and your monthly liabilities total €35000, borrow a flexible amount that does not hamper your budget.
For example, borrowing €20000 as car finance would be helpful. Moreover, you may qualify for this amount easily. It may leave you with limited cash to counter daily needs. If an unexpected finance hits the way, do not worry. Check facilities like emergency loans in the Ireland marketplace. It will help you meet important requirements immediately with instant cash disbursal.
Though first-time car buyers can struggle to get loan approval, they may eventually get help. Specific government schemes and direct lenders help finance your car finance needs. Be cautious about the hidden fees that may increase the loan costs. For this, pre-qualification may help. It may help you determine the approximate amount of money you need to finance the car. Likewise, you can finance the car.