Have you been considering car finance? If you’ve never applied for a finance package before, then you might have some questions about how it all works. We’ve collected together some of the most frequently asked questions on car finance from our help and advice section to help make the process smoother and easier for you.

Who is eligible for car finance?

To be eligible, you have to be at least 18 years old and under the age of 75 at the start of the agreement. The majority of lenders will need you to have been in the UK for at least 3 years. That’s because they need to be able to track your financial history, which is harder if you have not been in the UK for that long. You do not have to have a UK passport, but you do need to be a permanent UK resident.

What proof do you need?

When the time comes to apply, you will need to be able to prove your identity, your address and your income. For identity, a full UK driving licence is the preferred option. You can prove your address with a document such as a council tax or utility bill. For your income, you can use your payslips from work or bank statements. You will need to provide 3 years’ worth of address and employment history too, but you may not need any supporting documents to prove that.

What types of car finance product are there available?

The main types of car finance product available are personal contract purchase, hire purchase and lease purchase. Each have their own different quirks that make them suitable for different customers. What’s important is you know roughly how much you want to borrow, how much you want to pay each month, how long you want the agreement to last, and what you want to happen at the end of the finance period. Then you can use a car finance calculator or apply for a no obligation quotation from Creditplus. 

Do I need to pay a deposit?

Whether or not you need a deposit depends on the lender. Some will ask you for a deposit, others may not. It’s always a good idea to have some form of deposit, as it will lower the total cost of your finance package and reduce the cost of your monthly repayments.

Are there any restrictions on which car I can buy?

You can finance a new, nearly new or used car with Creditplus. Used cars can be a maximum of 15 years old, have a maximum mileage of 100,000, and have a minimum resale value of £3,000.

Classic cars can be older than 15 years – speak to your customer advisor if classic car finance is the option you are looking for.

Can I finance another type of vehicle?

At Creditplus, you can finance more than just cars. You can finance motorbikes, vans, motorhomes and even classic cars. Whether you’ve already found the perfect vehicle and just need a great finance package, or if you only have a rough idea of what type of vehicle you want and need help finding it, your Creditplus customer advisor will help get you on the road to your ideal new vehicle.

Can I get car finance with a bad credit rating?

Here at Creditplus, we understand that not everyone has the perfect credit history. There are many bumps on life’s road, but that doesn’t mean you should be unable to take advantage of car finance. We work with a wide panel of specialist lenders, each one working with various different types of customer from all sorts of financial backgrounds. Some specialise in dealing with customers with bad credit ratings. Once you have applied, your customer advisor will be in touch to discuss all the options available to you.

What is a balloon payment?

For some of the car finance packages available, you will hear talk of a “balloon payment”. This is the term used for the cost of buying a car outright at the end of a lease purchase and personal contract purchase agreement.

In these types of finance packages, you don’t pay off the total cost of the car across the agreement, like you do in hire purchase. Instead you pay the difference in value of the car between the start and the end of the finance period. If you want to own the car at the end of the agreement, you must pay this “balloon payment”.

What APR will I be charged?

The APR you will be charged will depend on a number of factors. The first is your credit rating. It’s a good idea to check what your rating is before you apply, so you have an idea of what sort of interest rate you will be charged. The second is the type of car finance product you take out. The third is based on which lender you choose to fund your finance package, as we compare finance products from a wide panel of lenders to find you the best deal. Creditplus will provide you with a complete range of options that are available to you once you have applied.

Will applying affect my credit rating?

When you apply for car finance with Creditplus, your credit rating will not be negatively affected. This is because Creditplus carry out what’s known as a “soft credit search” on your file. A normal credit search is recorded on your file, which can lower your credit rating. A soft credit search is not recorded, meaning you can make your application with the confidence it won’t affect future finance deals that you might apply for.

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