The word “guaranteed approval” seems relaxing for individuals eying the best car finance quotes. Getting the wheel on the roads is a dream for students and employees alike. Everyone wants to enjoy the most of their life travelling without booking cabs every time. Having their car grants them the opportunity to maintain it the way they want.
However, the journey from applying for car finance to financially owning one is long. It requires inclination, patience, research and discipline on the payment front. Most individuals want to own it quickly.
It is the reason most individuals turn to the shortest route to get the car they want. One of these ways is “guaranteed car finance”. This type of car finance is a straightforward way to own a car. However, it does not work as you believe it to.
Let’s analyse how guaranteed car finance works. Later, the blog will discuss the best ways to prepare your profile to get one.
How does a car finance quote with guaranteed approval work?
Guaranteed car finance was born out of the idea that “the lender will approve the application regardless of the credit score or affordability”. It is the reason individuals remain curious about 100% guarantee on car finance quotes. However, the reality is entirely different. According to FCA, a legal financial authority in the country, “No lender can provide car finance without conducting relevant credit and affordability checks.” It is simply illegal.
If not guaranteed finance, then what does “guaranteed car finance” mean?
Guaranteed car finance implies immediate approval if your credit score, income, and expenses are fair enough to afford the car. Precisely, your income must be higher than the amount you want to loan. You must be able to reveal the potential to make regular repayments apart from other liabilities. If you lack it, you must provide security like- a guarantor to pay on your behalf. If his income and credit credentials are good, you may get car finance on low-interest rates and terms.
Once you get the car finance approval, you must make regular payments in instalments towards the loan.
Car finance is until the loan term agreement. If you fall, your interest costs rise and you pay extra. Be mindful while choosing the repayment term and the amount you can comfortably pay. After agreement completion, you can either:
- Buy the same car with a one-off balloon payment
- Switch to a new car finance agreement by returning the previous car
7 Ways to Ensure Guaranteed Car Finance Approval
While applying for guaranteed car finance is easy, approval requires preparation. Let’s analyse the best ways to improve possibilities for the 100% car finance approval:
1) Improve your credit score
It is one of the most important factors to consider before applying for guaranteed car finance. Although credit score does not matter much in this type of finance, it may help you fetch a low-cost loan.
Analyse ways to update your credit history. If you are a graduate, postgraduate student, or employed, check some regular income to improve your application. It is a must get the car finance. Apart from that, consolidate your debts using instalment loans for bad credit from direct lenders only in the UK marketplace. By qualifying for these, you pay on a single instalment per month instead of dealing with multiple lenders. Furthermore, you may get better rates by applying for an instalment loan for a bad credit score.
Regular payments on the loan will help you improve your score and optimise it. Post that, you may qualify for favourable car finance quotes and terms:
- Remove any joint account connections
- Update your details on the electoral roll
- Update your driving licence and get one by passing the driving test
2) Save before applying for car finance
How much time it will take you to save to own the car finance depends on your income. If your income is low, you could hardly save towards the car finance and vice versa. One of the major parts associated with getting guaranteed car finance is – a deposit. It is upfront money that you pay to the car finance provider. The benefit of this is:
- It lowers the overall liability over the car
- It lowers monthly instalments
- Lowers the interest costs on the loan
Before applying for a loan, you must save for a deposit. Most individuals, to reduce liabilities and costs, pay 10% of the car’s costs upfront. It helps their credit score and goals.
3) Reduce your debt-to-income ratio
It is one of the important parameters that lenders consider before providing guaranteed approval on car finance. Debt-to-income ratio reveals the ratio of debts to income. If debts exceed income, lenders reject the application. Therefore, limit or curtail expenses to an extent. Leaving more flexibility down the line will help you qualify for better rates. It grants lenders the security of getting the money back. You can reduce your expenses by:
Switching to living below the means for the time being
Unsubscribing to unused subscriptions
Changing the energy subscriptions to a lower one
Improving income
Reducing reliance on credit cards
After doing this for at least 6 months, you can check your prospects to qualify. Explore guaranteed car finances with no credit check facility quotes. Do not apply for multiple lenders at a time. Instead, choose the best one for your finances. Under this, the lender conducts a soft credit check and provides an estimate of the costs according to your existing financial behaviour. You can accordingly continue the thing and get car finance with an affordable quote.
Note: No credit check car finance does not guarantee you the car finance. It is just the basic check that does not leave any mark on your credit score. Instead, it helps the borrower and the lender know the potential to qualify after detailed checks.
Bottom line
By analysing these ways, you can improve your potential to get guaranteed car finance. Getting a car is stressful. However, when you know the aspects to work on, it gets easier.
Identify your car’s purposes, needs and specifications you need before choosing the car. You can opt for used car finance if you are new to the driving journey or lack the finances to own one.
In this way, just a few preparation steps can leave you in a better place. It would help you land the right deal for you.
Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.