As a guarantor lender, we see many different people from many walks of life borrowing money for many different reasons. However, one of the more popular reasons that people are borrowing money through us here at Guarantor My Loan, is so that they can purchase a new (or at least, new to them) car, motorcycle or van. Although many people use credit in order to obtain the vehicle they want or need through car finance, research is not always done on how to get the most from this credit, and some borrowers are left paying loan installments for a car which may not have been worth it in the first place. We’ve put together this guide to help you get the most from the money you’ve borrowed, and to help you choose the vehicle which is going to bring more value to your life, thus making your borrowing a positive experience which benefits you in the long run.
When looking for a car loan, it’s important to research the best method of borrowing for you, taking into account your personal circumstances and your desired outcome. There are many ways of finding a personal loan in order to get a car, but we’ll be talking about guarantor loans in this guide. Guarantor loans are ideal for those who may not have the best credit history, due to missed payments in the past, never having borrowed before, or because they have not been a resident in the UK for very long (unfortunately you cannot bring good credit scores with you when you move country). With the support of a guarantor, who is usually a friend or family member of the borrower, who agrees to pay for any missed loan installments, the borrower is able to obtain a larger amount of credit at a lower interest rate than they may be entitled to at a mainstream bank or other high street lender.
Understanding how much money you have to spare each month for loan repayments is an important part of working out how much you can borrow, and therefore your budget for your new car. When you know how much you’re able to comfortably spare, check with a variety of guarantor lenders in order to see which option is the best for your particular circumstances. Remember to check their FAQ section to understand exactly how their loans work, as each lender is slightly different.
The next step you’ll need to take before you secure your guarantor loan is to find a vehicle which not only fits within budget, but which gives you the features and benefits you need. Every car owner will be looking for something different from their vehicle. For instance, many people take out car finance in order to get a car which will fit their growing family inside, whereas others will take out a car loan in order to buy their dream two-seater convertible – if you want to make the search easier and the outcome more favourable in the long run, you may want to work out what kind of car you want to purchase before heading out to dealerships or searching online looking for something which fits in your budget. Consider size, accessibility, boot space, where you’ll be driving the vehicle and how often, fuel economy and possible insurance costs in order to avoid frustration and additional costs which may not have been factored into the budget. Once you know roughly how much you’ll need to spend to get the best car for you, and how much you’re able to borrow, it should be easier to make a decision on who to borrow from.
Applying for a guarantor loan is very easy, but as both the borrower and the guarantor have to fill in an application and speak to the loan company as part of the process, it can create a delay if there’s miscommunication or if one party is not able to complete their side of the application straight away. For this reason, we recommend that you ensure your guarantor understands the process and everything that is expected of them before beginning the application together. You do not have to do this in the same room as one another, of course, but setting aside time so that you can communicate with each other can help things to move much more smoothly.
Guarantor loans are applied for online, and a simple initial form is usually the first thing you’ll need to complete. Once this is complete, the guarantor lender will ask for some supporting documentation and they may wish to speak to you on the phone in order to verify certain pieces of information. Once both you and your guarantor have completed all requirements, your joint application will be looked at by professional underwriters to ensure the loan is affordable and fair to all.You can often have your money within just 24hours if you are able to complete the application promptly.
As you’ll effectively paying more for your car through the loan interest payments than the amount you bought it for, it’s important to find ways of making the deal as valuable as possible. Many people find that car salesmen, both those selling new and second hand vehicles, will happily negotiate if they think it will mean making a sale. This means that you should negotiate and haggle for what you want, and in many cases extras like extended tax, a new cam belt and fresh brake pads can be easily won, although only if you ask politely!
It’s also important to look at value at the other end – the loan company. You should always go with a guarantor lender who has FCA Treating Customers Fairly principles at the heart of their lending. Some will offer rewards – for instance Guarantor My Loan will give 1 months’ worth of loan payments back to you at the end of the loan term, providing you’ve made all payments in full and on time.
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Registered Office: MATCH THE CASH LIMITED ACRE HOUSE, 11/15 WILLIAM ROAD, LONDON, UNITED KINGDOM, NW1 3ER. Company No. 08667447