Entries Tagged 'Car Finance' ↓

A guide to car finance for everyone
Car finance is something most of us will need at sometime of our lives. In fact for most countries car finance is a necessity for people of all ages to buy a car, especially when they are new. However with car finance getting harder and harder due to the current credit crisis it is now much more difficult to get approved for car finance.

Does this mean that most of us will not be able to get approved for car finance? Not at all. It is just that we might need to work a little harder or make an effort to understand what makes banks and lending companies accept or decline potential borrowers.

Car finance providers are looking for people to borrow just as much as borrowers are looking for lenders. Without borrowers lenders are out of business and there would be very little enterprise and not capitalism if nobody could borrow cash.

However banks are not looking to provide car finance to any borrower, they are looking for reliable payers that have a history to back them. If that is not possible they require secured loans where they have a collateral to take if the borrower is not willing to pay.
The secret is to make ourselves look as safe a borrower as we can whether we are young, old, male or female.

If you are young you need to find alternative ways of proving you are a low risk driver as you will probably not have a credit history to show. These are some tips that will help:

Use your parents as collateral. Banks will often take the signature of an additional person on a loan. In case you do not pay your parents, tutor or friend will have to.

Show them your good grades and take advanced driving lessons. Having good grades especially when studying towards a well paying career can be used as security for banks that appreciate having high potential earners in their portfolio. Taking on advanced driving lessons proves you are a responsible and safe driver plus they can be great fun.

What about when your credit record and score is less than perfect? Work is required. Despite the defeatist attitude many hold, there are things you can do to improve your credit. Here are a few:

Take on a secured credit card. Credit card companies will be happy to give you credit if you locate the maximum amount of credit you can borrow in a frozen account you cannot touch unless you terminate your credit. Then use your credit card often and make sure you pay the balance every month. This way you will be creating a positive credit history which will put you in a good position to apply for car finance.

If you are denied car finance don’t continue applying to every car finance company you see. Every time they carry out a credit check this affects your scoring in a bad way. Making it look like you are a high risk customer and desperate.

Peace of mind car finance, worth the headache

As the economical situation gets worse and worse car companies are finding ways to stop the free fall in sales. One company that is offering an innovative solution for buyers is Ford owned car manufacturer Volvo. The scheme Volvo is proposing is called “Peace of mind finance”. The idea behind Peace of Mind finance is to give buyers the confidence to buy a new Volvo despite the current economical insecurity.

What is the Peace of Mind deal about?

The deal is that if you buy a car at one of Volvo’s car dealers with Volvo finance you will get a complimentary personal protection insurance (PPI) in case the borrower loses his job. Volvo feels that the main reason people are currently shying away from buying a new car is the fear of losing their job and being unable to afford the monthly payments. Volvo seek to fight this fear by providing a personal protection insurance that will pay for the monthly installments if the borrower loses his job.

Remember however that attaining this type of loan is dependent on fulfilling a number of requirements and applying before the 30th of June.
This is a good offer, a personal protection insurance is an expensive type of insurance coverage that would increase your monthly payments considerably. Having a personal protection insurance is a relief when we work hard and inevitably fall down either legally or financially.

How to qualify?

Qualifying  for this type of finance is rather simple, although not always attainable for all customers. Volvo’s finance arm will need to accept the proof of income and approve the loan based on the customers credit rating and collateral. Then an agreement is signed by the borrower which includes a self declaration of eligibility for the “special” mortgage protection plan.
Buying a car in today’s environment is a problem, however it is also a necessity. The question is how far do you feel you should get into debt for the car you need. Many worry that if they buy a new car or the car they want they might lose it altogether if they lose their job. This has caused many to shy away from buying on credit. It is not a bad thing to prefer buying with cash. In fact it is the buy now pay later culture that might have put us in the economic mess we now are, or at least contributed towards it.

For these reasons this “peace of mind” scheme of Volvo promises to attract some attention. You must keep in mind however that to qualify for this peace of mind scheme you must go through Volvo’s finance, which may or may not be the best finance you can get. It is therefore a matter of checking that the deal you are getting with this scheme or any other is at least as good as what you can get with other finance providers.

Regardless of the choice you make, this scheme might help people to see the importance of having appropriate coverage when taking on large loans. In many countries like Spain it is a legal requirement to have life insurance so that if the worst happens your family does not have to pay your loans.