If you’ve selected a pre-owned vehicle you’d like to purchase with support from a car loan, you’re ready to take the next step and try and secure a finance agreement. Before you start applying, it’s worth getting all the important information you need organised to ensure you’re prepared, but specifically what do you need to finance a used car?
Applications can be easily made online, but supporting documents are always requested. You can avoid wasting time by getting everything you require for your application beforehand.
Information on your vehicle of choice
Once you’ve found the used vehicle you want to buy, make a note of its make and model and registration along with any other information you can get hold of. If you’re buying your car through a private sale, it’s important that you get the full cooperation of the seller, as details may be required from them in order for your finance deal to be successful.
Personal information on your situation
You’ll typically be asked to rate your credit history from poor to excellent, so it’s a good idea to know how your current credit file looks to lenders. Companies like Experian and ClearScore offer a service enabling you to check out your current credit rating online. This can be an effective way to ensure you can answer these questions.
If you’re to be the registered keeper and driver of the vehicle, you will need to supply your lender with a copy of your valid driver licence.
Proof of address
You’ll need to supply proof of your address. This is a very simple check for anti-fraud purposes for the most part. Lenders prefer to see that you have been located at your address for at least six months, although they may consider a shorter term. Generally, the longer you’ve been resident, the better. A utility bill or bank statement are both considered acceptable.
Proof of your regular income
Evidence of your earnings will usually be required in most circumstances. This can take the form of monthly payslips or copies of your bank statements showing regular payments. In some circumstances, your employer could be contacted to verify any details you give so ensure you are truthful.
In order to act responsibly, brokers, lenders and dealers must check that you are able to afford to make your repayments on your used car loan.
A photograph of yourself
As a preventative measure against fraud, in some cases a photograph of yourself will be requested to cross check against the picture present on your driving licence.
If your credit rating is poor or limited, or you are unable to show proof of earnings you can still apply for finance on a used car, but you will need a guarantor. A guarantor is someone willing to vouch for you financially who will accept the responsibility of making your monthly payments if you are unable to during the term of your finance agreement.
Always make sure your guarantor is fully aware you are nominating them before making any applications, as it is their credit history that will be checked.
While deposits are not required for finance agreements, they may be requested by dealers to secure a vehicle. Before paying anything to dealers or private sellers, contact your lender with all relevant details on the vehicle. The lender can then contact the dealer and carry out an evaluation before any money changes hands, and there is no danger of you losing a deposit.
At Car.co.uk, our ambition is to offer car buyers access to all the information they require when making a purchase through a finance agreement.