Five steps to follow before applying for car finance

At MotorPocket we work with a multitude of car finance providers who will consider different credit backgrounds. However there are a few steps that can help with your application.

1. Get a healthy credit score

Make this your priority as without one you will find it hard to make a successful car finance application. Each credit reference agency - Equifax, Experian, Noddle (CallCredit) - holds a credit report made up of your credit history. You can access this information by contacting the credit reference agencies. Your credit report lets you see the details your eventual lender would know about you. Arguably the main pieces of information that your credit report includes are whether you have kept up to date with payments on other loans and credit cards, and the total amount of credit you already have and how much of that you are currently using. See our detailed guide to credit reports and ratings.

2. Try to avoid late payments

If you want someone to lend you a lot of money then you must show evidence that you can be trusted to pay it back. Failure to make a repayment in time can stay on your credit report for a minimum of six years which can cause difficulties when applying for further finance. A direct debit can be a useful way to avoid forgetting to make repayments. If you think you will not be able to afford a payment, contact your lender as soon as possible. They may be able to reduce payments temporarily or assist in other ways to avoid defaults on your credit file.

3. Decide on your budget

Be realistic on how much you can afford each month. Consider the total running costs of the car not just your monthly finance payments, such as insurance, fuel, MOT and servicing.

4. Check the car

For those deciding to buy a used car, before picking the one which you think is right for you put it through some checks to make sure that there are no underlying issues before purchasing it. Double check the exterior, interior, under the bonnet and everything else, even take it for a test drive before coming to any agreements. See our detailed check list on what to look for when buying a used car.

5. How long do you want to borrow?

The general length of most new-car loans are around four to five years. However, longer terms with lower repayments also means paying more in financing costs. Consider how long you will want to keep the car as well as what you can afford. It is usually possible to refinance part way through a finance agreement, however if your car value is lower than the outstanding finance you will need to finance or fund the difference.