Applying for a Car Loan: Key Things To Consider First

Is it time to buy your first car? Or perhaps you’re looking to upgrade an existing vehicle? Either way, it’s one of the biggest purchases that many of us will ever make. One way to get value for money is to choose from one of the many great used car options out there. 

There’s plenty of choice – from hot hatchbacks to luxury supercars. But it’s always important to think about how you’re going to cover the cost of your next car. One option is to apply for a car loan. And one benefit of doing so is the ability to spread the cost over a longer period.

But it’s not something you should rush into without thinking about it first. Before applying for a car loan or finance, here are some of the main factors you’ll need to consider first.

Check your credit report

It’s a good idea to check your credit report first. Why? Well, a low credit score or errors on your report could affect your chances of being approved. Car finance providers will use your score as part of their decision-making process.

But don’t panic if your credit report isn’t perfect. There are many out there in a similar position.  There are providers such as Go Car Credit who specialise in helping those with a less-than-ideal credit score. So, you can still get the finance – and the car – you’re looking for.   

Think about your budget

At the same time as thinking about your credit score, it’s also worth considering how much you want to borrow – and for how long. This means being realistic. You should only ever look to get a car loan that you know you’ll be able to afford to pay back. 

So, here are some questions to ask yourself to help with budgeting. How much are the monthly payments and how do they work with your current bills? Do you know the total cost of the loan – including interest? By knowing these figures, you can work out if a car loan will work for you.

What car is right for you?

This is probably something that’s already entered your mind. If it hasn’t, however, ask yourself which make, model or type of car will best fit your needs. It can help you avoid choosing a car that’s not fit for purpose. After all, do you need a massive MPV for driving alone around town?

You might start to understand why hatchbacks are among the most popular cars in the UK. Or you could be surprised to learn that, after thinking about it, an estate car is the perfect option.  

Find and compare quotes

So, you know what type of car you’re hoping to get. And you’ve done all the maths to come to a budget that works for you. If so, there’s just one final step you need to take before applying for a car loan. It isn’t a difficult step, though, and it could save you cash in the long run.

Shop around to get quotes from different providers. This lets you weigh up the various interest rates, loan fees and agreement terms before applying. Some providers also let you check your eligibility first so that you know if you’re likely to be approved before you apply.

By taking these steps, you give yourself the strongest possible chance of being approved for a car loan. And that means you move closer to being able to afford your next car.