Purchasing a car involves high amount of money that may not be affordable from own pocket. Vehicle finance, therefore, becomes part of buying a car for most of the aspiring people. The loan, however, should be availed only after ensuring some steps to escape incurring debts.
Prior to applying for the finance, it is crucial to ask the credit rating agencies for your credit report. The report will be studied by the lenders in order to find out the risks. Hence, you must correct any errors in the report about the payments you made in the past. As the terms-conditions and interest rate will be determined on your existing credit rating, it is advisable to first pay off some of the old loans, if any, and apply for the finance after the rating has improved a bit.
Vehicle finance comes in secured or unsecured options. Homeowners can find the secured loan at low rate of interest against any property, pledged for collateral. Such a loan is usually opted for buying a highly priced new car, as collateral can let you borrow the amount that matches with the car price. But, if you are a tenant or a homeowner, who does not want to put the property at stake, can also find the finance in unsecured option, without collateral. The rate of interest will be slightly on the higher side. The loan amount goes up to 25000 only. Repayment of both the secured or unsecured loans is restricted to 5-7 years.
Another aspect is that you are required to make a good amount of down payment to the lender. If you can make a sizable down payment, it will cut the lenders risks. Therefore, even bad credit borrowers can find suitable vehicle finance despite late payments, CCJs, arrears or payment defaults. But you should first apply for the rate quotes of the lenders. Some of these offers can be located at competitive rates, especially when the loan is availed through online mode.