If you are looking for car finance or a car loan, but you have a less than perfect credit history, what are your options? It's easy to think that you have very few, or that those options that are available to you will be expensive ones.
You may have given up on finding cheap car finance and be preparing to pay extortionate rates of interest, or even resigning yourself to the bus. The fact is that a combination of two recent events have made finding car finance very difficult for many people.
The recession has caused all manner of financial problems, both for individuals and for corporations and financial institutions. A vast number of people have experienced difficulties, often through no fault of their own, with companies collapsing, jobs being cut back and redundancies rife.
This has led to many people finding themselves having to choose between feeding their family or paying the bills, and as a result have ended up with credit histories that don't make pretty reading.
Much of this is now in the past, and many people have now managed to pick themselves up, regain employment and sort out the outstanding debts. However, this doesn't immediately have any impact on the low credit ratings that prevent them from obtaining cars on finance.
Often it can cost a fortune keeping an old car on the road, and you know full well that it would be safer and more economical to have a new car - but do the finance companies see that? Of course not.
Because whilst individuals were finding it difficult through the recession, so were the car finance firms and other lending institutions. As a result, they all drew in their belts a little tighter, and raised the bar in terms of who would be eligible for getting credit.
Although you might have qualified for a car loan or car credit finance before, now that the credit companies have become extremely cautious it is much harder, and more people than ever are being declined car loans and car finance.
If you find yourself in this situation then don't give up, and certainly don't run into the arms of a shark loan or car finance firm that will either charge you very high rates of interest or limit you to purchasing a car from them with the finance they offer. There is an alternative option, and one which combines the best of several options.
Guaranteed car finance is a phrase you'll often hear, although it's important to be aware that this can mean one of three different things, so before you jump in to the first guaranteed car finance deal you see, make sure you know exactly what you're jumping in to.
The first thing to be aware of is that in some instances car finance companies offering guaranteed car loans are charging very high rates of interest. It is easy to assume that if you're being offered a guaranteed car loan that you'll be paying additional interest payments, but in fact this doesn't have to be the case.
After all, your credit history may suggest you're a risk, but since the car finance has the car as capital, where's the risk?
The second type of guaranteed car finance to watch out for are those which seem very favourable and reasonable, and which offer you a generous sum of money. However, you are then limited with what you can do with that car loan. Specifically, you find you're only allowed to spend the car loan on purchasing one of the few cars the car finance firm has itself.
Since when did car finance firms become car dealers?
The third type of guaranteed car finance firm are those offering both cheap car finance without charging you an arm and a leg in interest, and which are flexible enough to allow you to use the car loan to purchase any car you like, from any dealer you like, anywhere in the UK.
The other point to bear in mind as well is that by choosing a guaranteed car finance deal, and by keeping to the payment terms, you will actually be helping to build up your credit rating again, repairing the damage caused in the past, and opening up a brighter future.
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