Frequently Asked Questions
Why should I use a specialist funder for my car as opposed to my bank?
A bank will lend you money for almost anything. But they will only extend you a certain amount of credit. By using a specialist car finance company for you car purchase you are leaving your valuable credit line with the bank free, should you require finance for something else.
Is there such a thing as a “blacklist”?
This is a term often used, to refer to people who are having trouble obtaining credit.
There is no physical list that is shared amongst finance companies that says “Do not lend money to the following people” They do, however, have access to and share information with credit reference agencies which will reflect how you have conducted your credit in the past.
There are several reasons why people are unable to obtain credit. First, the finance company have to know that you exist. Generally this is done by checking the electoral register to see if they can trace you for at least 3 years. Second they need to see that you have the ability to manage repaying your debts, so they will check with a credit reference agency to see what credit you have had and if you have made your payments on time. This will also show if you have entered into any IVA’s (individual voluntary arrangements) with creditors. Have been or are bankrupt or have any CCJ’s (county court judgements) Any of these will make it harder to get credit.
I’ve never had credit, but I still can’t get a loan?
This can be a catch 22 situation. Because you have never had credit, companies cannot assess how you manage it and are therefore reluctant to provide it to you. It may be possible to obtain the loan if you apply to your own bank, as they have knowledge on how you conduct your account. The other option may be to have a family member stand as a guarantor. The other way to improve your credit rating is to apply to your bank for a credit card. Even if they only give you a small credit limit and you only use it once a month and clear the balance each time, it will improve you credit rating.
Why has one company turned me down, but another accepted me?
Each company has its own set of criteria on who it will lend money to. Although in most cases they use a score system each method of scoring is unique to each finance company. Although there will be common ground in certain areas.
Why do companies advertise low APRs’ yet when I apply they don’t give me that rate?
This is linked to the companies credit score. If you achieve below a certain criteria you will not qualify for that rate, but they may offer you a higher rate. The point of advertising low APRs’ is to attract customers to apply, hoping, that after you have gone through the application process and they offer you the higher rate you will feel that you can’t be bothered to go through the whole process again with someone else.
Why am I being charged such a high rate?
There is a term used in the finance industry called “rate for risk” This means that the higher the finance company consider the risk is of lending you money, the higher the rate they will charge you.
If I have any slow payments, defaults or CCJ’s will I be excluded from obtaining credit?
Not necessarily. Each finance company has a different lending criteria. Some will only want people with very good credit history, but there are companies who specialize in helping people who have had difficulties in the past. Of course the rates they charge reflect the increased risk they are taking.
There is no set rule to how lenders decide who they will lend money to. Quite often they will use a point system, with each factor scoring variable points. The total then deciding if you meet their criteria and if you do, what rate they charge. Don’t think that just because they advertise a Typical APR of 5.9% that you will automatically qualify for that rate .