Car finance is quite a simple process; it allows you to afford the car of your dreams, without having to pay a large lump sum upfront to buy it. Financing a car lets you spread the cost of your new car over a set period of time, making the amount manageable. When the lease term is over, depending what kind of lease you choose, you can either walk away with the car because you’ve paid off the whole amount (Hire Purchase Lease), give the car back because you’ve only been ‘renting’ it (Personal Contract Hire) or choose to pay a balloon payment at the end to own it (Personal Contract Purchase).
Whichever car you are looking at, or whichever finance you are looking to apply for, an important and mandatory part of the car leasing process is a credit search. A credit search will provide the finance company with details of your credit score, and this is what will affect your chance of getting a car lease. It will let the lenders know how financially secure you are. That doesn’t mean that you have a lot of money, but rather, how good at repaying loans and finance you are.
WHAT IS A CREDIT SCORE?
Your credit score is based on your credit report and history. When you apply for any type of finance or loan, be it a credit card, mortgage, personal loan or car finance, the lenders will check your credit score to decide whether they want to give you the loan or not.
If you have always kept up with all payments you’ve had to make with any sort of finance, it’s likely you’ll have maintained a good credit score and you’ll be more likely to get approved. Higher credit scores show a higher probability that you will pay back the loan and make your payments on time, which indicates to lenders that you’re a lower risk than someone with an adverse credit score.
Bad credit score – If you have consistently missed financial payments, and have gone into arrears, have CCJs or have had judgments towards you, your credit score will show this. It will be much harder to then get another company to offer you finance.
HOW DOES MY CREDIT SCORE AFFECT MY CAR FINANCE?
As with any other financial lender, it will all depend on your credit score to determine how much the financial company want to lend you. There is no exact credit rating that will guarantee you a certain loan. In fact, it is all personal and even some people with bad credit will still be able to take out car finance. However, the score does make a difference when discussing car leasing options and payments;
If you have good credit;
If you have bad credit;
WILL CAR FINANCE IMPROVE YOUR CREDIT SCORE?
Every time you take out a loan, it is added to your credit report. There, other lenders will be able to see how good you are at repaying loans. When you take out a car lease, you will be paying monthly payments for 2-4 years, depending on your lease terms. If you make every payment, on time, this will show financial companies that you are capable of paying back loans and in turn, will improve your credit score.
SHOULD I STILL APPLY TO LEASE A CAR WITH BAD CREDIT
Yes, absolutely, we deal with many people from all financial and credit backgrounds. Each lender will have different criteria and your credit score will be treated differently by each financer. If applying for a car lease through someone like Hippo Motor Finance, you’ll be sure that we’ll put your request forward to a huge range of lenders and leasing products, many of which deal with adverse credit. Since we specialise in bad credit car finance, we have many options available, even some no deposit deals.
HOW DO I CHECK MY CREDIT SCORE?
When you apply for car finance through Hippo, we will do a credit check for you. We will then let you know, as quickly as possible, if you have been approved for car finance.
You can also check your score yourself online, through websites such as Experian, Callcredit and Equifax.
HOW CAN I IMPROVE MY CREDIT RATING?
WHY CHOOSE HIPPO TO FINANCE YOUR NEW CAR?
We are car finance specialists who deal with ALL types of credit. We offer;
If you want to apply for car finance, head to our website or give us a call on 01254 956 777 today.
We expect more than 51% of our customers to achieve this rate.
|Loan Amount||Total Cost of Credit||Representative APR||48 Monthly Payments||Deposit Amount||Loan Term||Total Amount Payable|
|£7,500||£3019.16||19.1% APR||£219.77||£0||48 Months||£10,519.16|
We are a broker not a lender and our registered office is Trident Park, Trident Way, Blackburn BB1 3NU. Our contact number is 01254 919000