How to Apply for a Loan When Purchasing a Car

Most of us need a car, whether it is to go on a road trip or to drive to work. However, the price range of a new or used car is out of reach for most people. Thankfully, there exists such a thing as a loan that enables individuals to purchase a car and pay it off over time.

Here are a few things to take into consideration once you have decided to finance your vehicle via a reputable car dealership or finance institution.

Choosing a Loan

The upside of taking out a loan is there is a wide range of car finance options available on the market. It’s important to compare these options carefully to select the most suitable package. Some individuals may want the option to return the car to the lender and upgrade it for a new model. This is known as a PCP Agreement.

However, there is also an option to own the car at the end of an agreement. In this case, a Hire Purchase agreement may be the most suitable choice.

Proof of Identity

You will need to prove your identity if you decide to apply for car finance. This is just a requirement by law. Most financing institutions also accept a passport or a driver’s licence as proof of identity. Some institutions may need a copy of both sides of the photo ID card.

Proof of Income

Finance providers will always ask for proof of income before providing car finance. A bank statement or three months’ payslips are normally sufficient. Bank statements are normally required to prove to the lender that you can afford your monthly instalments.

Your Credit Rating

Everyone that applies for finance goes through a credit rating check. Everyone that plans to apply for finance needs to be aware of their Credit Score. Having a bad credit score may also lead to your loan application being rejected.

Finally, once you have all the financial aspects of your car purchase in place, you can decide on the car you need. You can learn all about purchasing a new or used car at Abbey Car Centre.