Buying a new car (or one that’s new to you, anyway) can be an exciting time, especially if you’re treating yourself to something a bit nicer than what you’re used to. You may even be splashing out on your very first vehicle, in which case, you’ll be keen to get a good deal. Car finance can be a tricky thing to work out, particularly when there is so much to take into account. Many people who have been turned down by the mainstream lenders tend to gravitate towards guarantor loans, as these are a good ‘middle ground’. You can get higher funding (up to £7,500) at a more reasonable rate than other lenders aimed at those with a less-than-perfect credit history.
Get more car for your money One of the first things you should do is to shop around for the right car. Just because you have the funds to buy something straight away, doesn’t mean that this is always the best bet. You should take your time and work out the running costs, as well as any other factors that may be important to you (such as room for a child’s car seat, a large boot space etc.) before making a decision. Try to make your money go as far as you possibly can. This way, you’ll spend less, get more, and make your credit work for you. You may find that you don’t need to borrow as much, which could see you paying off the debt much sooner than you thought you would.
Think about total monthly costs When looking at how much you’ll pay for your guarantor loan each month, you should also think about your increased costs that are related to car ownership. Insurance payments, petrol, parking costs and car tax etc. will all add up, so you should make sure that all of these new payments are covered. If you’re used to spending a huge amount on public transport, then the cost of this will offset some of your new costs. All the same, you should sit down and work out your extra expenses as accurately as you can – this will help you with the ‘income and expenditure’ check that the guarantor lender may do as part of your application.
Find a responsible guarantor Finding a responsible guarantor is important, as they will help you to get your application accepted by the lender. If you don’t have a guarantor, then you cannot be approved for a loan. This is because the guarantor (who could be a close friend or family member, like a parent or sibling) acts as a ‘boost’, raising your credentials so that they fit in with the lending criteria for these higher amounts at better rates. Their signature on the application means that they personally vouch for you to pay, and if you don’t, then they are agreeing to pay for any instalments you cannot meet. It’s rare that a guarantor ever has to pay anything, so as long as they’re happy with the arrangement, and trust you to meet each payment in full and on time, then you should be good to go.
Get more car for your money One of the first things you should do is to shop around for the right car. Just because you have the funds to buy something straight away, doesn’t mean that this is always the best bet. You should take your time and work out the running costs, as well as any other factors that may be important to you (such as room for a child’s car seat, a large boot space etc.) before making a decision. Try to make your money go as far as you possibly can. This way, you’ll spend less, get more, and make your credit work for you. You may find that you don’t need to borrow as much, which could see you paying off the debt much sooner than you thought you would.
Think about total monthly costs When looking at how much you’ll pay for your guarantor loan each month, you should also think about your increased costs that are related to car ownership. Insurance payments, petrol, parking costs and car tax etc. will all add up, so you should make sure that all of these new payments are covered. If you’re used to spending a huge amount on public transport, then the cost of this will offset some of your new costs. All the same, you should sit down and work out your extra expenses as accurately as you can – this will help you with the ‘income and expenditure’ check that the guarantor lender may do as part of your application.
Find a responsible guarantor Finding a responsible guarantor is important, as they will help you to get your application accepted by the lender. If you don’t have a guarantor, then you cannot be approved for a loan. This is because the guarantor (who could be a close friend or family member, like a parent or sibling) acts as a ‘boost’, raising your credentials so that they fit in with the lending criteria for these higher amounts at better rates. Their signature on the application means that they personally vouch for you to pay, and if you don’t, then they are agreeing to pay for any instalments you cannot meet. It’s rare that a guarantor ever has to pay anything, so as long as they’re happy with the arrangement, and trust you to meet each payment in full and on time, then you should be good to go.